Fuller v. Hartford Acc. and Indem. Co.

• Decision Date: 30 October 1979
• Docket Number: No. 1,CA-CIV,1
• Citation: 601 P.2d 1360,124 Ariz. 76
• Parties: Thomas R. FULLER and Terri Fuller, his wife, Appellants, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Appellee. 4009.
• Court: Arizona Court of Appeals

Page 1360

601 P.2d 1360

124 Ariz. 76

Thomas R. FULLER and Terri Fuller, his wife, Appellants, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Appellee.

No. 1 CA-CIV 4009.

Court of Appeals of Arizona, Division 1, Department A.

Oct. 30, 1979.

Beer & Kalyna, P. C. by Donald P. Roelke and Olgerd W. Kalyna, Phoenix, for appellants.

Snell & Wilmer by Douglas W. Seitz and John J. Bouma, Phoenix, for appellee.

OPINION

DONOFRIO, Judge.

This is an appeal from a summary judgment in a garnishment action in favor of Hartford Insurance Company, defendant-appellee, and against Thomas R. Fuller and his wife, plaintiff-appellants. The appeal relates to an automobile accident that occurred on March 31, 1975, in which Thomas R. Fuller was injured while a passenger in a vehicle driven by Almer Lee Fagin. As a result of that accident, Mr. Fuller and his wife (Fullers), filed a complaint for damages against several defendants, including Almer Lee Fagin and Shirley Fagin, his wife. It was alleged in the complaint that the accident was caused by the negligence of Almer Fagin, that he was a resident of Shirley Fagin's household and that he was acting on behalf of the marital community at the time of the accident.

Shirley Fagin was insured by Hartford Accident and Indemnity Company (Hartford) at the time of the accident. Fullers' attorney advised Hartford that they considered both Almer and Shirley Fagin to be covered by the Hartford policy. Hartford defended Shirley Fagin (and obtained summary judgment in her favor) but refused to defend Almer Fagin. The basis for Hartford's refusal to defend was that Almer Fagin was not covered by his wife's policy because he was not a resident of her household. A default judgment was entered against Almer Fagin because of his failure to appear and defend the suit.

Fullers brought a garnishment-type of action against Hartford on Shirley Fagin's policy seeking payment of the default judgment entered against Almer Fagin. All parties are in agreement that for Almer Fagin to be covered under his wife's insurance policy he had to be a resident of her household at the time of the accident. The complaint against Hartford did not allege that he was a resident of the insured's household at the time of the accident. Fullers' theory of recovery was that the default judgment against Almer Fagin admits all factual allegations of their complaint, including the allegation therein that Almer Fagin was a resident of his wife's household. They argued that Hartford was barred by the doctrine of Res judicata from litigating in the subsequent suit whether or not Almer Fagin was actually a resident of the insured's household.

Both parties moved for summary judgment. The trial court allowed Hartford to submit an affidavit that showed Almer Fagin was not a resident of Shirley Fagin's household. Fullers did not controvert the affidavit. The superior court entered judgment for Hartford from which Fullers appeal.

The issue before this court is whether the default judgment against Almer Fagin had a Res judicata effect in the garnishment action that precluded Hartford from litigating, and the superior court from considering, the question of Almer Fagin's residence in the garnishment action. We hold that it did not preclude Hartford from raising the defense and therefore the summary judgment in favor of Hartford was properly granted.

Appellants' rights against Hartford rise or fall with their contention that Res judicata precluded Hartford from litigating the factual question of where Almer Fagin resided at the time of the accident. At the outset, we will define Res judicata and clarify the distinction between it and collateral estoppel.

" 'Briefly stated, the doctrine of res judicata is that an existing final judgment rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive as to every point decided therein and also as to every point raised by the record which could have been decided, with respect to the parties and their privies, in all other actions in the same or any other judicial tribunal of concurrent jurisdiction.' Hoff v. City of Mesa, 86 Ariz. 259, 261, 344 P.2d 1013 at 1014 (1959).

The United States Supreme Court has described the distinction between res judicata and collateral estoppel in the following terms:

'The basic distinction between the doctrines of Res judicata and collateral estoppel, as those terms are used in this case, has frequently been emphasized. Thus, under the doctrine of Res judicata, a judgment "on the merits" in a prior suit involving the same parties or their privies bars the second suit based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, such a judgment precludes relitigation of issues actually litigated and determined in the prior suit, regardless of whether it was based on the same cause of action as the second suit.' Lawlor v. National Screen Service Corp., 349 U.S. 322, 326, 75 S.Ct. 865, 867, 99 L.Ed. 1122 (1955). " Industrial Part Corp., v. U.S.I.F. Palo Verde Corp., 26 Ariz.App. 204 at 206, 547 P.2d 56 at 58. (1976).

Thus, it is clear that in this matter on review we are dealing with the application of collateral estoppel, or issue preclusion, as opposed to Res judicata.

Appellants sought to preclude Hartford from litigating, in the garnishment action, the question of where Almer Fagin resided at the time of the accident. Appellants' argument was that "(a) necessary question to be resolved in the underlying action was the nature of any judgment against Almer Fagin whether it was a community or separate obligation. This required the resolution of the factual issue of his residence at the time of the accident."

We are guided by the rule stated in Hartford Accident & Indemnity Co. v. Villasenor, 21 Ariz.App. 206 at 209, 517 P.2d 1099 at 1102 (1974):

"It is true that an insurance company which refuses to defend an action under circumstances where it has a duty to do so is bound by facts determined in the trial of such action. Herendeen v. United States Fidelity & Guaranty Company, 19 Ariz.App. 399, 507 P.2d 1011 (1973). The application of this doctrine of collateral estoppel, however, is limited to those...