Schoeman v. New York Life Ins. Co.

Decision Date02 October 1986
Docket NumberNo. 52170-1,52170-1
Citation106 Wn.2d 855,726 P.2d 1
PartiesJoyce SCHOEMAN, Appellant, v. NEW YORK LIFE INSURANCE COMPANY, Respondent.
CourtWashington Supreme Court

Dodd, Coney & Bishop, Howard K. Todd, Seattle, for appellant.

Lane, Powell, Moss & Miller, Deborah D. Wright, Douglas E. Wheeler, Seattle, for respondent.

CALLOW, Justice.

The Superior Court dismissed the wrongful death claim brought by Mrs. Joyce Schoeman, the appellant, as personal representative of her deceased husband Giovanni Schoeman. She alleges that the respondent New York Life Insurance Company ("Insurer") negligently issued a keyman life insurance policy on the life of her husband and such issuance was the proximate and foreseeable cause of his death. The trial court dismissed her action as a matter of law holding that her claims were barred by res judicata and that she had failed to state a claim upon which relief could be granted against the Insurer. We affirm.

Giovanni Schoeman came to the United States from Europe to produce original art works. He had talent. His works included a sculpture used in the promotion of a movie. On July 27, 1977, Schoeman and Carl Edward Zehner entered into an agreement pertaining to the manufacture, sale and reproduction of Schoeman's works. Zehner formed a corporation, E.Z., Inc., of which he was the president and sole shareholder, to manufacture and sell reproductions of Schoeman's art works. In December 1977, the Insurer issued a keyman life insurance policy on the life of Giovanni Schoeman, which named E.Z., Inc. as beneficiary.

The policy lapsed within 1 year of issuance. In April 1978, Schoeman moved to Santa Barbara, California. Mrs. Schoeman claims that after the move Schoeman no longer continued to produce art work for E.Z., Inc. Nevertheless, on January 18, 1979, Zehner and Schoeman applied to reinstate the keyman life insurance policy which the Insurer subsequently reinstated. Mrs. Schoeman asserts that the Insurer acted negligently in reinstating the policy because it knew or should have known that E.Z., Inc. had no insurable interest at that time in the life of Giovanni Schoeman. She claims that she has a separate wrongful death action against the Insurer based upon the Insurer wrongfully renewing a life insurance policy where the beneficiary had no insurable interest in the life of the insured. She claims that this cause of action, based upon the claimed negligence of the Insurer, has not been settled as a part of the settlement of the interpleader action.

In January 1981, Dennis Boyd Miller shot and killed Schoeman. Miller was convicted of murder by a California court. During the trial a witness testified that Miller had boasted that someone who stood to benefit from a $100,000 insurance policy on Schoeman's life had hired him to commit the murder.

In March 1982, the Insurer commenced an interpleader action in the United States District Court for the Western District of Washington. Named as defendants and possible claimants to the insurance proceeds were: Mrs. Schoeman; John Berryhill, the estate administrator; Zehner; E.Z., Inc.; and a Zehner creditor. Mrs. Schoeman and Berryhill raised third-party claims against Zehner and E.Z., Inc., alleging that Zehner had hired Schoeman's murderer in order to obtain the proceeds of the keyman life insurance policy under which the corporation stood to benefit. At this time Mrs. Schoeman did not assert any claims against the Insurer.

In March 1983, the Insurer moved for discharge from the interpleader action, seeking discharge from its obligations as a party litigant. The insurer admitted liability on the policy in the amount of $100,000 plus interest. Mrs. Schoeman and Berryhill responded to the motion for discharge and raised no objection to the entry of an order discharging the Insurer from further liability other than the amount of the interpleaded funds. On March 19, 1983, the federal court ordered the discharge of the Insurer. On July 27, 1983, the policy claimants reached a settlement which provided for payment of $82,536.14 to the Schoeman estate. The other claimants divided the remaining policy funds.

Mrs. Schoeman filed this action in January 1984. The wrongful death claim raised against the Insurer charges the Insurer with responsibility for the death of Giovanni Schoeman, just as Mrs. Schoeman had charged Zehner and others with responsibility for his death in her cross claim in the interpleader action. The Insurer moved for a summary judgment of dismissal. The trial court granted the motion, dismissing Mrs. Schoeman's complaint as a matter of law. She appeals the dismissal of her claims.

The parties raise the following issues:

I. To what extent does a federal interpleader action require that a party raise a claim in an interpleader to have it barred in state court as res judicata?

II. Is Mrs. Schoeman's claim a compulsory counterclaim required to have been brought during the interpleader?

III. Did Mrs. Schoeman fail to state a claim in state court upon which relief against the Insurer may be granted?

RES JUDICATA

The doctrine of res judicata requires a concurrence of identity in four respects: (1) subject matter; (2) cause of action; (3) persons and parties; and (4) the quality of the persons for or against whom the claim is made. Norco Constr., Inc. v. King Cy., 106 Wash.2d 290, 721 P.2d 511 (1986); Bordeaux v. Ingersoll Rand Co., 71 Wash.2d 392, 396 429 P.2d 207 (1967); Meder v. CCME Corp., 7 Wash.App. 801, 805, 502 P.2d 1252 (1972). In Meder we find at 804-05:

Courts in their concern to eliminate duplicitous litigation and yet allow a party to litigate on a matter which would not have been properly included in the previous action often refer to this doctrine of repose as res judicata, meaning a thing decided, or as a prohibition against splitting causes of action. Thus, in Sanwick v. Puget Sound Title Ins. Co., 70 Wn.2d 438, 441, 423 P.2d 624, 38 A.L.R.3d 315 (1967), we find:

This court from early years has dismissed a subsequent action on the basis that the relief sought could have and should have been determined in a prior action. The theory on which dismissal is granted is variously referred to as res judicata or splitting causes of action. Currier v. Perry, 181 Wash. 565, 44 P.2d 184 (1935); Sayward v. Thayer, 9 Wash. 22, 36 Pac. 966, 38 Pac. 137 (1894).

* * *

... As early as Sayward v. Thayer, 9 Wash. 22, 36 Pac. 966, 38 Pac. 137, it was stated:

"The general doctrine is that the plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

* * *

"The matter in controversy here was included within the matter in controversy there. It either was, or else could have been, adjudicated in the former action. That judgment, therefore, became res judicata of the issues and matters here presented."

See also Bradley v. State, 73 Wn.2d 914, 442 P.2d 1009 (1968). If a matter has been litigated or there has been an opportunity to litigate on the matter in a former action, the party-plaintiff should not be permitted to relitigate that issue. Walsh v. Wolff, 32 Wn.2d 285, 201 P.2d 215 (1949); Kiecker v. Pacific Indem. Co., 5 Wn.App. 871, 491 P.2d 244 (1971); 46 Am.Jur.2d Judgments § 395 (1969).

Res judicata does not bar claims which arise out of a transaction separate and apart from the issue previously litigated. Seattle-First Nat'l Bank v. Kawachi, 91 Wash.2d 223, 226, 588 P.2d 725 (1978). Further, res judicata is not intended to deny the litigant his or her day in court. Luisi Truck Lines, Inc. v. Utilities & Transp. Comm'n, 72 Wash.2d 887, 894, 435 P.2d 654 (1967).

Res judicata requires a final judgment on the merits. Leija v. Materne Bros., Inc., 34 Wash.App. 825, 827, 664 P.2d 527 (1983) (citing Bordeaux v. Ingersoll Rand Co., supra ); Restatement (Second) of Judgments § 13 (1982). The March 29, 1983 order dismissing the Insurer from the interpleader states in part:

ORDERED that plaintiff be and hereby is discharged from any and all liability in this cause and from any and all liability to all parties to this cause of action for any claims they may have against the plaintiff arising from the issuance of the insurance policy giving rise to this interpleader action, as a result of the tender which it has made into the registry of this court.

(Italics ours.) The interpleader court dismissed the Insurer pursuant to Fed.R.Civ.P. 54(b) which reads:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.

(Italics ours.) Federal Civil Judicial Procedures & Rules, Title 28, 131-32 (1985).

Mrs. Schoeman argues that the order dismissing the Insurer does not make an express determination as to whether there was no just reason for delay or an express direction for entry of judgment as required. Thus, she argues that the order is not a final order or final judgment on the merits and res judicata is not appropriate. See ...

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