Mizer v. State Auto. and Cas. Underwriters

• Decision Date: 25 February 1972
• Docket Number: No. 54480,54480
• Citation: 195 N.W.2d 367
• Parties: Lucille MIZER, Appellee, v. STATE AUTOMOBILE AND CASUALTY UNDERWRITERS, a Corporation, Appellant.
• Court: Iowa Supreme Court

Page 367

195 N.W.2d 367

Lucille MIZER, Appellee, v. STATE AUTOMOBILE AND CASUALTY UNDERWRITERS, a Corporation, Appellant.

No. 54480.

Supreme Court of Iowa.

Feb. 25, 1972.

Timothy J. Walker and Whitfield, Musgrave, Selvy, Kelly & Eddy, Des Moines, for appellant.

Thomas L. McGullough, Sac City, for appellee.

MASON, Justice.

Plaintiff, Lucille Mizer, sustained personal injuries and property damages September 16, 1968, from a collision between an automobile operated by her and another owned by Harold Crabtree and driven by Terrell E. Crabtree. May 9, 1959, she instituted a law action against Crabtrees to recover on the theory specified acts of their negligence were the proximate cause of the collision. Trial of that lawsuit resulted in a plaintiff's verdict on November 4, 1969, for $7250. The judgment entered thereon was not satisfied as the Crabtrees were uninsured. That action will hereafter be referred to as suit I.

At the time of the collision, plaintiff was insured under a policy issued by defendant, State Automobile and Casualty Underwriters, which afforded the insured as defined therein protection against uninsured motorist for bodily injury.

In December 1969 plaintiff commenced a law action against defendant insurance company asking judgment for $10,000, the policy limits. She alleged substantially the same facts as were set out in suit I, but added, (1) plaintiff was insured at all material times by defendant insurance company, (2) such insurance included uninsured motorist coverage to policy limits of $10,000, (3) the Crabtrees carried no liability insurance, and (4) plaintiff is covered under the terms of the policy and thereby is entitled to judgment for $10,000. This action will be referred to as suit II.

The insurance company in answer admitted plaintiff's policy was in full force and effect at all times material; that $10,000 coverage was provided under the uninsured motorist portion of the policy; and operation of the automobiles by plaintiff and Crabtrees at the time and place alleged. Defendant denied all other allegations of plaintiff's petition including the cause of the collision and damages claimed to have resulted therefrom. In separate divisions defendant asserted two lines of affirmative defense alleging the judgment entered in favor of plaintiff against Crabtrees was a bar to the maintenance of suit II since the matters alleged in her petition as the basis for her claim against the insurance company had been fully adjudicated and settled by the judgment in suit I and plaintiff is collaterally estopped from maintaining the present action as the issues had been fully adjudicated and finally settled by the judgment in suit I.

Plaintiff in reply alleges defendant is estopped from asserting that the judgment in suit I is binding on the insurance company in suit II. In her amended reply plaintiff focuses on this language in defendant's insurance contract: 'No judgment against any person or organization alleged to be legally responsible for the bodily injury shall be conclusive, as between the insured and the company, of the issues of liability of such person or organization or of the amount of damages to which the insured is legally entitled unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company.'

Plaintiff further alleged that although she tried to obtain the company's consent to institute suit I, it refused and insisted upon arbitration in accordance with the terms of the uninsured motorist indorsement.

In other words, plaintiff in effect asserts in reply to the affirmative defenses defendant is estopped by its policy provisions from proposing suit II is precluded as a matter of law on the basis of res judicata as to cause of action and collateral estoppel as to amount of damages.

On April 24, 1970, defendant filed motion to adjudicate law points. Rule 105, Rules of Civil Procedure. The court was asked to hear and determine the legal questions of res judicata and collateral estoppel raised by defendant's affirmative defenses. The court held the insurance company's policy provision, as set out above, was contractually binding on both insured and insurer, and therefore judgment in suit I would not preclude or limit action in suit II.

Immediately preceding voir dire examination, plaintiff moved in limine to exclude from evidence any reference to the amount awarded plaintiff by verdict in suit I. The trial court sustained plaintiff's motion.

Before plaintiff rested her case, defendant made an offer of proof as to the prior litigation and jury verdict in suit I. Plaintiff's objection thereto was sustained. Finally, the case was submitted to the jury which awarded plaintiff a verdict for $8500.

After its motion for new trial was overruled, defendant appealed asserting the trial court erred: (1) in failing to find the judgment in suit I was res judicata to plaintiff's cause of action in suit II, (2) in failing to find plaintiff was collaterally estopped to maintain suit II by reason of her judgment in suit I, and (3) in sustaining plaintiff's motion in limine.

I. In seeking reversal the insurance company does not contend, either in its pleadings or argument, that its written consent to the prosecution of suit I or submission to arbitration in accordance with the policy provisions is a condition precedent to its liability. See Annot., 24 A.L.R.3d 1325 relating to validity and enforceability of arbitration provisions in uninsured motorist indorsements. Rather, defendant admits its liability under the policy by reason of Crabtrees' culpability having been established in suit I and its liability for damages to the extent established in that suit in this statement from its brief and argument:

'In the case before the court there is no question that pursuant to its policy of insurance, State Automobile and Casualty Underwriters, defendant-appellant, was liable to plaintiff-appellee if the uninsured motorists, that is, defendnats Crabtree, were culpable, and, then only to the extent that plaintiff-appellee was and is entitled to recover against the uninsured motorists.'

In this connection, defendant points out the judgment in suit I was in existence at the time plaintiff initiated suit II; the judgment in suit I was entered after a full and fair hearing on the merits of plaintiff's claim for damages against the Crabtrees by a court of competent jurisdiction without fraud or collusion; and plaintiff's theory of defendant's liability in suit II under the coverage afforded for bodily injury caused by uninsured motorist is predicated upon culpability of Crabtrees, the uninsured motorist in suit I.

Thus, the defenses of res judicata and collateral estoppel are not now being urged to escape liability per se, but only to avoid relitigation of the issue of damages which could conceivably be found greater than $7250.

Although defendant sets out its first and second assignments of error in two distinct divisions, the effect of both arguments is that, 'The technical distinctions drawn between the terms res judicata, estoppel by judgment, collateral estoppel or between estoppel by judgment and estoppel by verdict would have no practical useful application in this case.' We need not pursue this contention further but for the distinction between the doctrines see Cream Top Creamery v. Dean Milk Company, 383 F.2d 358, 361--363 (6 Cir.).

Defendant, in its first and second assignments, urges a liberal application of res judicata and collateral estoppel doctrines, which would presumably now entail an interpretation of Goolsby v. Derby, 189 N.W.2d 909 (Iowa 1971), which dealt with the questions of 'claim preclusion' and 'issue preclusion.' Yet, it is clear the trial court, perhaps accepting defendant's liberal application arguendo, found defendant estopped by the terms of the insurance contract--a hurdle defendant attempts to cross in its third assignment. The court stated 'The court adjudicates the law to be that such a provision in the insurance policy is binding upon the insurance company and the insured and that, therefore, any previous or prior judgment is not res judicata nor is the plaintiff estopped from maintaining this action.' The trial court does not base its adjudication on lack of privity, identity of issues, or identity of causes. Instead, its finding is based on terms of the insurance contract set out, supra, relating to consent to sue.

Most of defendant's contentions outlined in its brief and argument have been weighed and addressed by the court in Goolsby v. Derby, supra. For instance, defendant expends considerable effort in supporting its position as privy to suit. I However, prefect symmetry of parties is no longer a prerequisite to application of collateral estoppel, or 'issue preclusion.' Goolsby v. Derby, 189 N.W.2d at 916--917.

In the cited case, 189 N.W.2d at 914, we were asked to modify the requirement of mutuality of estoppel by judgment as a prerequisite to availability of the doctrine of collateral estoppel to a stranger to the judgment to the extent of permitting the use of collateral estoppel in order to allow a party to defensively prevent relitigation of an issue already determined.

In Goolsby, two of the three prerequisities which the court looks for before applying collateral estoppel, namely identity of the issues raised in the successive proceedings and determination of those issues by a valid, final judgment to which such determination is necessary, were present. In the opinion, 189 N.W.2d 915--916, this statement of the law is expressed:

'The foundation theory on which the doctrine of issue preclusion rests is that the parties ought not to be permitted to litigate the same issue more than once. * * * (citing authorities)

'On the other hand, the doctrine of collateral estoppel is predicated on the philosophy that a party should have a full and fair day in court to be heard on the issues...