Jones v. State Farm Mut. Auto. Ins. Co.

Decision Date15 November 1993
Docket NumberDocket No. 152605
Citation202 Mich.App. 393,509 N.W.2d 829
PartiesWilliam K. JONES, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
CourtCourt of Appeal of Michigan — District of US

Eames, Wilcox, Mastej, Byrant, Swift & Riddell by Jerry R. Swift and Keith M. Aretha, Detroit, for plaintiff-appellant.

Draugelis & Ashton by John A. Ashton, Plymouth, for defendant-appellee.

Before BRENNAN, P.J., and CORRIGAN and ANDERSON *, JJ.

CORRIGAN, Judge.

In this action for first-party no-fault insurance benefits, plaintiff appeals the grant of summary disposition for defendant pursuant to MCR 2.116(C)(7) (action barred by prior judgment). We affirm.

The facts are undisputed. Plaintiff, a long-distance truck driver and resident of Kentucky, purchased an automobile insurance policy in Kentucky from defendant for his personal car. On June 13, 1990, plaintiff hauled gasoline for Hydrocarbon Traders in a tanker-trailer from Kentucky to a purchaser in Waterford, Michigan. Upon arrival, plaintiff began unloading the gasoline through rubber hoses from his vehicle to an underground storage tank on the purchaser's premises. While the fuel was being unloaded, one of the purchaser's employees parked a smaller truck perpendicular to plaintiff's tanker, leaving the truck's engine running. Gasoline fumes released from plaintiff's tanker were ignited by the idling truck. Plaintiff was injured in the ensuing explosion, even though he realized the imminent danger and was running away. He was approximately 150 feet from the truck at the time the explosion occurred.

In January 1991, after defendant had denied his claim for no-fault benefits in Kentucky, plaintiff brought suit in the circuit court for Clinton County, Kentucky, alleging breach of contract. In August 1991, the circuit court granted defendant's motion for summary judgment, holding that plaintiff was ineligible for benefits under Kentucky law because he was not engaged in the "use of a motor vehicle" at the time of the accident. The decision was affirmed by the Kentucky Court of Appeals in May, 1992. 1

In June, 1991, plaintiff brought the present Michigan action against defendant in the Wayne Circuit Court, seeking reimbursement of lost wages, medical expenses, and related expenses arising from the June 13, 1990, explosion. The suit originally alleged only a breach of the insurance contract issued in Kentucky. However, by amendment, in March 1992, plaintiff pleaded an additional ground arising under M.C.L. § 500.3163(1); M.S.A. § 24.13163(1):

An insurer authorized to transact automobile liability insurance and personal and property protection insurance in this state shall file and maintain a written certification that any accidental bodily injury or property damage occurring in this state arising from the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle by an out-of-state resident who is insured under its automobile liability insurance policies, shall be subject to the personal and property protection insurance system set forth in this act.

On May 1, 1992, the circuit court granted defendant's motion for summary disposition on grounds of res judicata. Defendant contended, and the circuit court held, that the Kentucky judgment barred the present action. The circuit judge found that the parties, the injury, and the contract were the same in the two actions, but that the damages sought differed because "Michigan coverages are greater."

The applicable standard of review under MCR 2.116(C)(7) requires us to accept all plaintiff's well-pleaded allegations as true and to construe them most favorably to the plaintiff. Dedes v. South Lyon Community Schools, 199 Mich.App. 385, 388, 502 N.W.2d 720 (1993). In reviewing a C(7) motion, the court must consider all affidavits, pleadings, depositions, admissions, and documentary evidence filed or submitted by the parties. The motion should not be granted unless no factual development could provide a basis for recovery. Harrison v. Director of Dep't. of Corrections, 194 Mich.App. 446, 449, 487 N.W.2d 799 (1992); MCR 2.116(C)(7); MCR 2.116(G)(5).

I. Plaintiff's action under M.C.L. § 500.3163(1)

; M.S.A. § 24.13163(1)

is barred by the Kentucky decision that

plaintiff had no claim under the policy.

The rule of res judicata is summarized in 1 Restatement Judgments, 2d, §§ 24, 25, pp 196, 209:

(1) When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar ..., the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

* * * * * *

The rule of § 24 applies to extinguish a claim by the plaintiff against the defendant even though the plaintiff is prepared in the second action

(1) To present evidence or grounds or theories of the case not presented in the first action.

Before we reach the substantive issues, we first address a procedural question. Although both parties insist that no issues involving a choice of laws are presented, we disagree.

Generally, matters relating to the right of action are governed by the laws of the state where the cause of action arose. All matters relating purely to the remedy are governed by the laws of the state where the action is instituted. Yount v. Nat'l. Bank of Jackson, 327 Mich. 342, 346, 42 N.W.2d 110 (1950). The forum state's rules relative to conflict of laws apply. McLouth Steel Corp. v. Jewell Coal & Coke Co., 570 F.2d 594, 601 (C.A.6, 1978). Under Michigan law, interpretation of contract provisions is governed by the law of the state in which the contract was entered. Id., citing Rubin v. Gallagher, 294 Mich. 124, 128, 292 N.W. 584 (1940); Vanderveen's Importing Co. v. Keramische Industrie M deWit, 199 Mich.App. 359, 364, 500 N.W.2d 779 (1993). The determination of the state in which a contract was entered is made in accordance with the law of the forum. Ohio ex rel. Fulton v. Purse, 273 Mich. 507, 509, 263 N.W. 874 (1935); Vanderveen's, supra 199 Mich.App. at 364, 500 N.W.2d 779.

The rule that contracts are interpreted pursuant to the law of the state in which the contract was entered, however, is subject to an exception. If the court of last resort in the foreign state has not declared the applicable foreign law with "absolute certainty," then Michigan law controls an action instituted in a Michigan forum. Bostrom v. Jennings, 326 Mich. 146, 154, 40 N.W.2d 97 (1949), citing 14 Am Jur, Courts, § 88. Kentucky courts have not spoken with "absolute certainty" regarding whether the Kentucky judgment would render plaintiff's Michigan claim res judicata.

"The general rule for determining the question of res judicata as between parties in actions embraces several conditions. First, there must be identity of the parties. Second, there must be identity of the two causes of action. Third, the action must be decided on its merits. In short, the rule of res judicata does not act as a bar if there are different issues or the questions of law presented are different." [Louisville v. Louisville Professional Firefighters Ass'n., 813 S.W.2d 804, 806 (Ky., 1991), quoting Newman v. Newman, 451 S.W.2d 417, 419 (Ky., 1970).]

The Supreme Court of Kentucky "has long followed the rule that the doctrine of res judicata, except in special cases, goes not only to points upon which the court was actually required by the parties to form an opinion and pronounce judgment, but to every point which properly belonged to the subject litigation and which the parties, exercising reasonable diligence, might have brought forward." Stephens v. Goodenough, 560 S.W.2d 556, 558 (Ky., 1977) (emphasis added). See also, e.g., Huntzinger v. McCrae, 818 S.W.2d 613, 615 (Ky.App., 1990); Dennis v. Fiscal Court of Bullitt Co., 784 S.W.2d 608, 611 (Ky.App., 1990). The doctrine of res judicata has a subsidiary rule that a cause of action may not be split and tried piecemeal. Egbert v. Curtis, 695 S.W.2d 123, 124 (Ky.App., 1985), citing Hays v. Sturgill, 302 Ky. 31, 34, 193 S.W.2d 648 (1946). See also, e.g., Kirchner v. Riherd, 702 S.W.2d 33, 34 (Ky., 1986) (the plaintiff could not bring a personal injury claim in circuit court after having received a judgment on a property damage claim in small claims court).

Kentucky courts have also held, however, that "the rule does not mean that the prior judgment is conclusive of matters which were not germane to, implied in, or essentially connected with the actual issues in the case although they may affect the ultimate rights of the parties and might have been presented in the former action." Strunk v. Bennett, 258 S.W.2d 517 (Ky.1953) (emphasis added). See also, e.g., Gilbert v. Bowling Green Bank & Trust Co., 460 S.W.2d 14, 15 (Ky.App.1970). Where "more than one primary right of [the] plaintiff [has been] invaded, or if there has been more than one invasion of a single primary right," res judicata will not bar the second suit. Citizens Telephone Co. v. Anderson, 291 S.W.2d 527, 528 (Ky.1956). The Kentucky Court "quoted with approval" from 46 Am Jur 2d, Judgments, § 402, p. 569, that "the doctrine of res judicata is to be applied in particular situations as fairness and justice require, and ... it is not to be applied so rigidly as to defeat the ends of justice." Spears v. Spears, 784 S.W.2d 605 607 (Ky.App., 1990), citing Floyd Co. Bd. of Ed. v. Layne, 474 S.W.2d 397 (Ky., 1972). After reviewing the law on res judicata in Kentucky, the Kentucky Court of Appeals determined that "the application of res judicata and collateral estoppel is best served on a case-by-case basis." Revenue Cabinet, Commonwealth of Kentucky v. Samani, 757 S.W.2d 199, 202 (Ky.App.1988).

Kentucky has not spoken with "absolute...

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