Kaiser v. Northern States Power Co., s. C6-83-440

• Decision Date: 03 August 1984
• Docket Number: Nos. C6-83-440,C4-83-565,s. C6-83-440
• Citation: 353 N.W.2d 899
• Parties: Gary F. KAISER, et al., Respondents, v. NORTHERN STATES POWER COMPANY, Appellant.
• Court: Minnesota Supreme Court

Page 899

353 N.W.2d 899

Gary F. KAISER, et al., Respondents, v. NORTHERN STATES POWER COMPANY, Appellant.

Nos. C6-83-440, C4-83-565.

Supreme Court of Minnesota.

Aug. 3, 1984.

Syllabus by the Court

1. Judgment entered in a prior action commenced by the employer of city firefighters to recover workers' compensation payments made by the employer is not a bar to a subsequent action commenced by the firefighters to recover common law damages not recoverable under workers' compensation law.

2. If the negligence of a landowner, or others in control of an instrumentality, creates risks which are not reasonably apparent to firefighters, or if a landowner, or others in control of an instrumentality, are negligent after firefighters arrive at the fire scene and that negligence materially enhances the risks or creates new risks, the negligent party is not shielded from liability by the "fireman's rule."

3. The "election of remedies" defense contained in Minn.Stat. Sec. 176.061 (1982) is unavailable to bar firefighters' personal injury actions arising out of negligence of employees of a natural gas company at the scene of the fire.

4. Under the circumstances existing in this case, it was error to apply offensive collateral estoppel on the issue of a natural gas company's liability to pay damages to injured firefighters.

Clyde F. Anderson, Donald Chance Mark, Jr., Laura S. Underkuffler, Minneapolis, for appellant.

Pierre N. Regnier, St. Paul, for respondents.

Considered and decided by the court en banc without oral argument.

KELLEY, Justice.

In this action brought by eight City of St. Paul firefighters against Northern States Power Company (NSP) for injuries allegedly sustained while fighting the Commodore Hotel fire in 1978, the trial court denied NSP's motion for summary judgment and ruled (1) that the firefighters' claims were not barred by res judicata or collateral estoppel; (2) that the "fireman's rule" as a matter of law did not bar the firefighters' recovery; and (3) that the "election of remedies" defense of Minn.Stat. Sec. 176.061 (1982) did not bar the claims. The trial court certified to us the questions presented by NSP's motion as important and doubtful within the meaning of Minn.R.Civ.App.P. 103.03(i). The trial court further granted the firefighters' motion for summary judgment on the issue of liability and ruled that the finding of NSP's negligence in a prior action estopped NSP from relitigating its liability in this action. We granted NSP's petition for discretionary review of that ruling.

We affirm the trial court's ruling that the firefighters' claims are not barred by res judicata or collateral estoppel, but only to the extent those claims were not compensated under workers' compensation law and the ruling that the "election of remedies" defense of section 176.061 did not bar the claims. We reverse the rulings that the "fireman's rule" is inapplicable as a matter of law and that NSP was collaterally estopped from relitigating its liability.

A natural gas explosion occurred at the Commodore Hotel on February 15, 1978, when a compression coupling separated and leaked gas which ignited, causing an explosion at 3:42 p.m. St. Paul firefighters and NSP personnel arrived at the scene by 3:50 p.m. Before NSP was able to shut off the gas, a second explosion occurred at 3:58 p.m., causing major property damage and numerous personal injuries. NSP employees eventually were able to shut off the gas at 4:10 p.m.

A number of lawsuits by the owner of the premises, building tenants, bystanders and others were commenced against NSP and others. Those cases were consolidated for trial. One of those suits was brought by the City of St. Paul, asserting a subrogation claim against NSP for workers' compensation payments made by the city to individual firefighters injured while fighting the fire. Prior to trial of the consolidated actions, NSP moved for summary judgment on this subrogation action, arguing that the "fireman's rule" barred the city's claim. The trial court granted summary judgment in favor of NSP. No appeal was taken from that summary judgment.

Subsequently, these respondent firefighters commenced this action to recover damages. NSP now argues that the former subrogation action judgment bars maintenance of this action under principles of res judicata or collateral estoppel. The trial court ruled the prior judgment was not a bar.

1. A fundamental rule embodied in the related doctrines of res judicata and collateral estoppel is that a " 'right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction * * * cannot be disputed in a subsequent suit between the same parties or their privies * * *.' " Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979) (quoting Southern Pacific Railroad Co. v. United States, 168 U.S. 1, 48-49, 18 S.Ct. 18, 27, 42 L.Ed. 355 (1897)). Under res judicata or "claim preclusion," a final judgment on the merits bars a second suit for the same claim by parties or their privies. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 649 n. 5, 58 L.Ed.2d 552 (1979); Hauser v. Mealey, 263 N.W.2d 803, 806-07 (Minn.1978). Under collateral estoppel or "issue preclusion," once an issue is determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation. Parklane Hosiery, 439 U.S. at 326 n. 5, 99 S.Ct. at 649 n. 5; Hauser, 263 N.W.2d at 806. We have applied collateral estoppel where: "(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue." Willems v. Commissioner of Public Safety, 333 N.W.2d 619, 621 (Minn.1983) (quoting Victory Highway Village, Inc. v. Weaver, 480 F.Supp. 71, 74 (D.Minn.1979)). Thus, for either res judicata or collateral estoppel to act as a bar to these firefighters' claims, we must determine whether the firefighters were in privity with the City of St. Paul at the time of its action against NSP.

In claiming privity did exist, NSP asserts that the city represented the interests of the firefighters in its subrogation action and that the city's claims were derivative of claims the firefighters might have had. In resisting this claim, respondent firefighters contend they were not in privity with the city because (1) they were never advised that the city was making a claim on their behalf; (2) the city, in fact, never asserted a claim on their behalf; and (3) they were never advised that a motion for summary judgment against the city was heard and granted in the first action. For these reasons, respondents argue, they have not had a "full and fair opportunity to be heard." See Lustik v. Rankila, 269 Minn. 515, 521, 131 N.W.2d 741, 745 (1964).

In order to determine whether the city and its firefighters were in privity, it is necessary to examine their relationship as defined in the workers' compensation statute. Minn.Stat. Sec. 176.061, subd. 5 (1982) allows an employee to bring an action against a third party who is liable for the employee's injuries, notwithstanding the employee's receipt of workers' compensation benefits. The same subdivision likewise allows an employer to maintain an action against a third party to recover compensation benefits paid to the employee. The statute allows intervention by either employer or employee in the other's action should the court deem it advisable.

In order to protect their own interests, as well as to avoid multiple suits, hindsight demonstrates that the respondents should have intervened in the city's suit against NSP. However, neither the statute nor our case law mandates employee intervention. Absent such a requirement, an employee should not lose any independent tort claims he may have by merely failing to intervene in an action commenced by his employer.

Under section 176.061, the employer is subrogated to the rights of its employee to the extent of compensation paid. It is entitled to no greater rights than the employee. Metropolitan Transit Commission v. Bachman's, 311 N.W.2d 852, 854 (Minn.1981). Thus, if the firefighters had brought the first action against NSP and the latter had been absolved of liability, the city, since it "steps into the shoes" of its employees, id., would be barred from bringing a later action. In other words, a determination in an action pursued by an employee that the employee has no rights against a third party also determines the employer's rights, which derive solely from the employee; namely, the employer has none. See, e.g., Iowa Electric Light & Power Co. v. Mobile Aerial Towers, Inc., 723 F.2d 50 (8th Cir.1983).

Of course, here the converse situation exists. Respondent firefighters are bringing their actions only after the rights of their employer have been fully adjudicated. Normally, when an employee sues a third party after receiving workers' compensation benefits, the employee sues on his own behalf as well as on his employer's behalf. Liberty Mutual Insurance Co. v. Nutting Truck & Caster Co., 295 Minn. 211, 215-16, 203 N.W.2d 542, 544 (1973). To the extent the employee recovers damages for medical expenses and wage loss for which that employee has been compensated by the employer, the employee receives damages as a trustee for the employer. Id. To this extent, the employer and employee must be said to be in privity. By ruling that res judicata does not bar the firefighters' claims, the trial court, in effect, provides the City of St. Paul a second chance at obtaining reimbursement from NSP for compensation paid. Yet res judicata bars a second suit for the same claim by the same party. Thus, to the extent that the firefighters'...