Matusik v. Arizona Public Service Co., s. 1

• Decision Date: 02 February 1984
• Docket Number: CA-CIV,Nos. 1,s. 1
• Parties: Joseph MATUSIK, and Sandra June Matusik, husband and wife, Defendants Cross-Claimants and Appellants, v. ARIZONA PUBLIC SERVICE COMPANY, Defendant Cross-Defendant and Appellee. Joseph MATUSIK and Sandra June Matusik, husband and wife, Defendants Cross-Claimants and Appellants, v. Arthur PICARD and Jane Doe Picard, husband and wife, dba Art's Meat Market, Defendants Cross-Defendants and Appellees. Joseph MATUSIK and Sandra June Matusik, husband and wife, Defendants Cross-Claimants and Appellants, v. Arthur PICARD and Jane Doe Picard, husband and wife; and Arizona Public Service Company, Defendants Cross-Defendants and Appellees. 6812, 1 6813 and 1 5999.
• Court: Arizona Court of Appeals

Page 882

684 P.2d 882

141 Ariz. 1

Joseph MATUSIK, and Sandra June Matusik, husband and wife, Defendants Cross-Claimants and Appellants, v. ARIZONA PUBLIC SERVICE COMPANY, Defendant Cross-Defendant and Appellee.

Joseph MATUSIK and Sandra June Matusik, husband and wife, Defendants Cross-Claimants and Appellants, v. Arthur PICARD and Jane Doe Picard, husband and wife, dba Art's Meat Market, Defendants Cross-Defendants and Appellees.

Joseph MATUSIK and Sandra June Matusik, husband and wife, Defendants Cross-Claimants and Appellants, v. Arthur PICARD and Jane Doe Picard, husband and wife; and Arizona Public Service Company, Defendants Cross-Defendants and Appellees.

Nos. 1 CA-CIV 6812, 1 CA-CIV 6813 and 1 CA-CIV 5999.

Court of Appeals of Arizona Division 1, Department B.

Feb. 2, 1984.

Reconsideration Denied March 13, 1984.

Review Denied June 20, 1984.

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears by Larry L. Smith and M.E. Rake, Jr., Phoenix, for Joseph Matusik and Sandra June Matusik

Snell & Wilmer by Donald D. Colburn and Vaughn A. Crawford, Phoenix, for Ariz. Public Service Co.

Ridenour, Swenson, Cleere & Evans by Harold H. Swenson and Michael J. Childers, Phoenix, for Arthur Picard and Jane Doe Picard.

OPINION

MEYERSON, Presiding Judge.

This consolidated appeal arises out of a natural gas explosion which occurred at a shopping center owned by appellants Joseph Matusik and Sandra June Matusik (Matusik). Two tenants, Dib Maali and Steve Rotschild, filed separate actions for damage to their property naming as defendants Matusik, Arizona Public Service Company (APS), and Arthur Picard, the tenant in whose store the gas leak allegedly originated. In both actions, Matusik filed cross-claims against APS and Picard. Summary judgment was granted against Matusik in both cases and it is from these judgments that Matusik appeals. As explained more fully herein, the trial court erroneously applied principles of res judicata and collateral estoppel and therefore we reverse.

I. THE MAALI LITIGATION

Maali sued Matusik, APS and Picard alleging that the defendants knew or should have known of a leak in the natural gas supply system in Picard's shop and that their failure to prevent further leakage caused a gas explosion injuring Maali and damaging his store. Shortly after the complaint was filed, Matusik filed a cross-claim against Picard and APS. Matusik contended that APS and Picard should have been aware of the gas leak and that they failed to prevent further leakage which resulted in the explosion.

APS initiated discovery against Maali and after receiving Maali's answers to interrogatories, APS moved for summary judgment against Maali. APS contended that Maali had no information which would indicate any negligence by APS nor did he know of any expert with knowledge of the cause of the accident. Picard filed his own motion for summary judgment against Maali based upon the same grounds asserted by APS. The trial court granted Maali an additional three months to file any controverting affidavits. Thereafter, Maali filed a supplemental memorandum in which he acknowledged that he was aware of no evidence of any negligence on the part of APS. As to Picard, Maali urged that material facts were still in dispute by virtue of Picard's deposition and a report by the City of Phoenix Fire Department. The trial court then granted APS's and Picard's motion for summary judgment.

Next, APS and Picard turned their attention to Matusik's cross-claim. They moved for summary judgment on the theory that Matusik's cross-claim presented liability issues identical to the allegations in Maali's complaint. They argued that, because Matusik had standing as an adverse party to oppose their motions for summary judgment against Maali, Matusik should now be precluded under the doctrine of res judicata from bringing his cross-claim against them. The trial court agreed and granted APS's and Picard's motions on the cross-claim.

II. THE ROTSCHILD LITIGATION

In a separate action, plaintiffs Steve Rotschild and Lillian Rotschild (Rotschild) brought suit against Picard, Matusik and APS. The Rotschild action was substantially similar to the action brought by Maali. Matusik again filed a cross-claim against Picard and APS which was virtually identical to his cross-claim in the Maali litigation. APS moved to dismiss the cross-claim and Picard moved for summary judgment on the cross-claim. Both motions asserted that the prior judgments in favor of APS and Picard in the Maali action barred Matusik's claim of negligence against APS and Picard. The trial court entered summary judgment in favor of Picard and APS.

At oral argument in this court, the parties agreed that the determinative issue in this consolidated appeal is whether Matusik's cross-claim in the Maali suit is barred by virtue of the summary judgments APS and Picard obtained against Maali. ^* We also agree. If summary judgment in favor of APS and Picard on Matusik's cross-claim in the Maali suit is proper, then Matusik's second cross-claim against APS and Picard in the Rotschild litigation is barred under the doctrine of res judicata. If the summary judgment against Matusik in the Maali litigation fails, then it was error to bar the litigation of the cross-claim in the second action. For the following reasons we conclude that summary judgment should not have been granted against Matusik in the Maali suit.

III. RES JUDICATA AND COLLATERAL ESTOPPEL

The doctrine of res judicata holds that a final judgment, rendered on the merits, is conclusive between the parties and their privies on every issue decided, as well as on every issue which could have been decided. Hoff v. City of Mesa, 86 Ariz. 259, 344 P.2d 1013 (1959). In order for res judicata to apply, there must be (1) a final judgment on the merits; and (2) a common "identity of the parties, the capacity in which they appear, the subject matter, and the cause of action." El Paso Natural Gas Co. v. State, 123 Ariz. 219, 222, 599 P.2d 175, 178 (1979), cert. denied, 445 U.S. 938, 100 S.Ct. 1331, 63 L.Ed.2d 772 (1980).

"Under the doctrine of collateral estoppel, the determination of a litigated fact or law which is essential to a valid and final judgment is conclusive between the parties or their privies in a subsequent claim." Farmers Insurance Co. v. Vagnozzi, 138 Ariz. 443, 675 P.2d 703, 706, No. 15687-PR, slip op. at 5 (1983). Collateral estoppel differs from res judicata in that the prior judgment precludes relitigation of issues actually litigated regardless of whether the prior action is based upon the same claim as the second suit. Industrial Park Corp. v. U.S.I.F. Palo Verde Corp., 26 Ariz.App. 204, 206, 547 P.2d 56, 58 (1976).

The cross-claim filed by Matusik against APS and Picard in the Rotschild litigation was the identical claim which Matusik filed against APS and Picard in the Maali litigation. Because there was a common identity between the parties and the subject matter of the respective cross-claims, the validity of the summary judgment in the Rotschild case depends upon the application of principles of res judicata. The validity of the Rotschild summary judgment, however, is derivative from the propriety of the summary judgment in the Maali litigation.

In the Maali action, the summary judgment entered against Matusik on his cross-claim hinges upon the application of principles of collateral estoppel. The cross-claim by Matusik against APS and Picard was a different and separate claim than the one asserted by Maali. The issue of APS's and Picard's negligence, however, was the subject of Maali's complaint as well as Matusik's cross-claim. Matusik, however, did not actually litigate the issue of APS's and Picard's negligence. The motion for summary judgment which APS and Picard filed against Maali, although served upon Matusik as a party, did not include a motion for summary judgment on the cross-claim. Similarly, Matusik did not file a memorandum or controverting affidavit in opposition to the APS and Picard motions. Thus, although Matusik did not actually litigate the issue of APS's and Picard's negligence, the precise issue we must determine is whether Matusik as an adverse party to APS and Picard, was required to litigate this issue on behalf of Maali and whether he should now be precluded from independently litigating the negligence of APS and Picard.

IV. LAW

We begin our analysis with a consideration of the Arizona cases relied upon by the parties. In Ocean Accident and Guarantee Corp. v. United States Fidelity and Guaranty Co., 63 Ariz. 352, 162 P.2d 609 (1945), the supreme court held that a suit between two insurance carriers was barred by a judgment in a prior action in which both carriers had been found to be jointly liable for workers' compensation benefits. Each party contended that the other was wholly responsible for the payment of the award. The court found that the exact same issues and claims had been previously presented to the industrial commission and litigated in the former action. The court stated that the test of whether a judgment is res judicata is determined not by the position of the parties in the case but by reference to their relationship to the other parties and their interests involved in the case. Id. at 360, 162 P.2d at 612. Even though the parties were co-defendants in the prior suit and had not been formally aligned as adversaries, the court found that the issue of their respective liability was "raised and determined between them in the original action," id. at 360, 162 P.2d at 612, and thus, the second suit was barred.

Each side in the present case claims to find support in Burrell v. Southern Pacific Co., 13 Ariz.App. 107, 474 P.2d 466 (1970). The Burrell litigation began with a wrongful death action by the estate of a passenger riding in Burrell's car against Burrell and the Southern Pacific Company. The suit arose from a collision between a train and the vehicle....