Hunter v. City of Des Moines

• Decision Date: 14 January 1981
• Docket Number: No. 64505,64505
• Citation: 300 N.W.2d 121
• Parties: Michael J. HUNTER and Becky McMurry, Appellants, v. CITY OF DES MOINES, Iowa, Appellee.
• Court: Iowa Supreme Court

Page 121

300 N.W.2d 121

Michael J. HUNTER and Becky McMurry, Appellants, v. CITY OF DES MOINES, Iowa, Appellee.

No. 64505.

Supreme Court of Iowa.

Jan. 14, 1981.

Robert W. Pratt, Des Moines, for appellants.

J. M. Sullivan, Asst. City Atty., for appellee.

Considered by REYNOLDSON, C. J., and HARRIS, McCORMICK, ALLBEE and LARSON, JJ.

ALLBEE, Justice.

The important question which we confront in this appeal is whether offensive use of issue preclusion can be invoked where mutuality of the parties is lacking. The sole assignment of error here is predicated upon trial court's denial of plaintiffs' application for separate adjudication of law points; in that application they asserted defendant City of Des Moines should be precluded from relitigating the issues of its negligence and of proximate cause in this action due to a judgment obtained against it by a different plaintiff in a prior negligence action which arose from the same factual background.

On January 18, 1978, plaintiff Michael J. Hunter was involved in a collision in Des Moines with another vehicle while operating an automobile owned by plaintiff Becky McMurry. At the time of the mishap, Karen Wadle was a passenger in the automobile driven by Hunter. Following the accident, separate lawsuits were filed by Wadle and the plaintiffs. In addition to the driver of the other car, ¹ both actions named the City of Des Moines as a defendant. The cause of action against the city in both cases was based upon its purportedly negligent failure to remove a snowpile in the vicinity of the intersection where the accident took place which allegedly obstructed the vision of the drivers involved. Plaintiffs did not attempt to join the Wadle lawsuit. Pursuant to Iowa R.Civ.P. 185, the city filed a motion to consolidate the two actions for trial, which was overruled. It then made application to this court for permission to appeal that ruling. The application, resisted by both Wadle and plaintiffs, was denied and the two actions proceeded separately. The Wadle case was the first to be tried, and resulted in a judgment against the city.

Plaintiffs then filed an amendment to their petition, in which they asserted that the judgment in the Wadle action precluded the city from relitigating the issues of its negligence and of proximate cause in this action. Plaintiffs followed with the application for separate adjudication of law points, in which, as before indicated, they requested a trial court ruling barring the city from contesting its negligence due to the prior adverse judgment in the Wadle case. Trial court denied this application, and the action proceeded to trial. Following submission of the case, the jury returned a verdict for the city. This appeal followed.

I. In general, the doctrine of issue preclusion ² prevents parties to a prior action in which judgment has been entered from relitigating in a subsequent action issues raised and resolved in the previous action. "When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." Restatement (Second) of Judgments § 68 (Tent. Draft No. 4, 1977). As we have noted in prior cases, the doctrine may be utilized in either a defensive or an offensive manner.

The phrase "defensive use" of the doctrine of collateral estoppel is used here to mean that a stranger to the judgment, ordinarily the defendant in the second action, relies upon a former judgment as conclusively establishing in his favor an issue which he must prove as an element of his defense.

On the other hand, the phrase "offensive use" or "affirmative use" of the doctrine is used to mean that a stranger to the judgment, ordinarily the plaintiff in the second action, relies upon a former judgment as conclusively establishing in his favor an issue which he must prove as an essential element of his cause of action or claim.

In other words, defensively a judgment is used as a "shield" and offensively as a "sword."

Goolsby v. Derby, 189 N.W.2d 909, 913 (Iowa 1971); see Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552, 559 n.4 (1979).

Traditionally, the presence of three prerequisites was required before the doctrine of issue preclusion could properly be applied in any given case: (1) identity of issues raised in the successive proceedings; (2) determination of these issues by a valid final judgment to which such determination is necessary; and (3) identity of the parties or privity ³ (mutuality of estoppel). Goolsby, 189 N.W.2d at 913. Subsequent cases developed from these traditional prerequisites a four-factor standard to be utilized in determining the applicability of the doctrine. See Schneberger v. United States Fidelity & Guaranty Co., 213 N.W.2d 913, 917 (Iowa 1973); see also In re Evans, 267 N.W.2d 48, 51 (Iowa 1978); Bertran v. Glen Falls Insurance Co., 232 N.W.2d 527, 533 (Iowa 1975). Before issue preclusion may now be employed in any case, these four prerequisites must be established: (1) the issue concluded must be identical; (2) the issue must have been raised and litigated in the prior action; (3) the issue must have been material and relevant to the disposition of the prior action; and (4) the determination made of the issue in the prior action must have been necessary and essential to the resulting judgment. Id.

In addition to elaborating on the prerequisites to issue preclusion, this court has modified the traditional requirement of privity where the doctrine is invoked in a defensive manner. Goolsby, 189 N.W.2d at 913-17. Issue preclusion may properly be applied in that fashion as between nonmutual parties where the four prerequisites delineated above are satisfied and where the party against whom the doctrine is invoked defensively "was so connected in interest with one of the parties in the former action as to have had a full and fair opportunity to litigate the relevant claim or issue and be properly bound by its resolution." Bertran, 232 N.W.2d at 533; see Larsen v. McDonald, 212 N.W.2d 505, 507 (Iowa 1973). However, until now we have declined to modify the traditional requirement of mutuality with respect to offensive use of issue preclusion. Bertran, 232 N.W.2d at 533-34. In this case, we must again consider whether the requirement of mutuality should in all instances remain a bar to the offensive use of issue preclusion by a litigant not a party or in privity with a party to the prior adjudication relied upon. This is because plaintiffs, non-parties to the Wadle judgment, seek to invoke the doctrine offensively, and it is undisputed that they fall outside the traditional definition of privity.

As is true where the doctrine is employed defensively, offensive use of issue preclusion may prevent needless relitigation and therefore promote judicial economy in some cases. Thus, strict adherence to the traditional requirement of mutuality in connection with the offensive use of issue preclusion may be unwarranted in appropriate circumstances. Nonetheless, other considerations support the adoption of a more restrictive modification of that rule than that which has been approved where the doctrine is invoked in a defensive manner. Two sound reasons for distinguishing between these applications of issue preclusion were noted by the United States Supreme Court:

First, offensive use of collateral estoppel does not promote judicial economy in the same manner as defensive use does. Defensive use of collateral estoppel precludes a plaintiff from relitigating identical issues by merely "switching adversaries." (Citation omitted.) Thus defensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action if possible. Offensive use of collateral estoppel, on the other hand, creates precisely the opposite incentive. Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a "wait and see" attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. (Citations omitted.) Thus offensive use of collateral estoppel will likely increase rather than decrease the total amount of litigation, since potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.

A second argument against offensive use of collateral estoppel is that it may be unfair to a defendant. If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable. (Citations omitted.) Allowing offensive collateral estoppel may also be unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant. Still another situation where it might be unfair to apply offensive estoppel is where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.

Parklane Hosiery, 439 U.S. at 329-31, 99 S.Ct. at 650-51, 58 L.Ed.2d at 561-62. While cognizant of these distinguishing factors, the Supreme Court nonetheless concluded that the preferable approach in the federal courts would be to grant trial courts broad discretion in permitting offensive use of the doctrine, as opposed to precluding such application. Under the general rule adopted by the Supreme Court, offensive use of issue preclusion would not be allowed in cases where a plaintiff could easily have joined in the earlier action or where offensive application would be unfair to a defendant. Id. at 331, 99 S.Ct. at 651, 58 L.Ed.2d at 562.

A similar position was...