Shahan v. Shahan

• Decision Date: 13 April 1999
• Docket Number: No. 80871,80871
• Citation: 988 S.W.2d 529
• Parties: Andrew SHAHAN, Appellant-Respondent, v. Todd SHAHAN, Defendant, State Farm Mutual Automobile Insurance, Respondent-Appellant.
• Court: Missouri Supreme Court

Page 529

988 S.W.2d 529 Andrew SHAHAN, Appellant-Respondent,
v.
Todd SHAHAN, Defendant,
State Farm Mutual Automobile Insurance, Respondent-Appellant. No. 80871. Supreme Court of Missouri,
En Banc. April 13, 1999.

Page 531

Brent Mayberry, Mayberry & Mayberry, Kirksville, for Appellant-Respondent.

Gary P. Paul, Brinker & Doyen, L.L.P., Clayton, for Respondent-Appellant.

ANN K. COVINGTON, Judge.

This appeal arises from a garnishment action following a trial in a personal injury action in which Andrew Shahan won a negligence verdict against his half-brother, Todd Shahan. Andrew sought to garnish the proceeds of an umbrella liability policy and an automobile insurance policy issued by State Farm Mutual Automobile Insurance. State Farm defended on the grounds that the household exclusion contained in each policy precluded coverage. The garnishment court found that Andrew could not recover under the umbrella liability policy, but could recover under the automobile policy. Both parties appealed. The Missouri Court of Appeals,

Page 532

Western District, affirmed the holding of the garnishment court. This Court granted transfer. Affirmed in part and reversed in part.

Andrew Shahan was injured in an automobile accident in 1991. Todd Shahan, Andrew's half-brother, was driving the vehicle. At the time of the accident, Andrew resided with his mother and stepfather, Nancy and Leo Hunolt. Leo Hunolt was the owner of the vehicle. Todd, who is not related to the Hunolts, resided elsewhere. The Hunolts carried two insurance policies: an umbrella liability policy having a limit of $1,000,000 and an automobile insurance policy with bodily injury coverage of up to $100,000. In March of 1992, Nancy Hunolt, as next friend for Andrew, filed an action for personal injuries against Todd. The judge in the personal injury action was Judge Normile.

In November of 1992, State Farm filed a separate declaratory judgment action naming Todd, Andrew, and Nancy Hunolt as defendants. State Farm sought a declaration that it did not have a duty to defend Todd in the personal injury action on the ground that Todd was not a permissive user. If Todd was not a permissive user, he was not an "insured" under the automobile policy. In May of 1994, the declaratory judgment court found that Todd was a permissive user and that State Farm had a duty to defend Todd.

The personal injury action then resumed in Judge Normile's court. As stated above, the sole parties in the personal injury action were Todd and Andrew. In August of 1995, State Farm tendered $25,000 to the court registry in compliance with the Motor Vehicle Financial Responsibility Law (MVFRA), sections 303.010 to 303.370, RSMo 1994, and filed a motion for leave to withdraw as counsel for Todd. In support of its motion, State Farm asserted that it had tendered its full policy limit because the household exclusion in the automobile policy precluded Andrew from recovering under the policy. In October of 1995, Judge Normile issued a memorandum and order ruling that the household exclusion in the automobile policy did not apply and denying State Farm leave to withdraw. Subsequently, in December of 1995, Judge Normile granted State Farm leave to withdraw as counsel for Todd, although the judge had not altered his view that the household exclusion in the automobile policy did not apply. In February of 1996, after a trial on the merits, Judge Normile entered judgment in favor of Andrew in the amount of $225,000.

After obtaining a judgment on the merits in the personal injury case, Andrew filed a "Request and Order for Execution/Garnishment" naming State Farm as the garnishee. In November of 1996, Judge Lewis, the garnishment court judge, concluded that Judge Normile's previous ruling on the automobile policy household exclusion was "law of the case" and ordered State Farm to pay the policy limit. Judge Lewis further concluded that Andrew could not recover under the umbrella policy. Both parties appealed.

I. State Farm's Appeal

State Farm asserts that the garnishment court erred in determining that the household exclusion in the automobile policy does not apply to Andrew. Before the household exclusion may be examined, however, it is necessary to consider Andrew's claim that the doctrines of collateral estoppel, law of the case, and waiver and estoppel preclude consideration of the household exclusion contained in the automobile policy.

Andrew contends that State Farm is barred by the doctrines of collateral estoppel and res judicata from raising the household exclusion defense in the garnishment action because Judge Normile decided that the household exclusion did not apply to Andrew in the personal injury action. Andrew fails, however, to undertake any analysis with respect to the doctrine of res judicata; his argument invokes only the doctrine of collateral estoppel.

The doctrine of collateral estoppel provides that an issue judicially determined in one action may not be relitigated in another action. Green v. City of St. Louis, 870 S.W.2d 794, 797 (Mo. banc 1994). When deciding whether the application of collateral estoppel is appropriate, courts should consider: (1) whether the issue decided in the prior adjudication was identical with the issue presented

Page 533

in the present action; (2) whether the prior adjudication resulted in a judgment on the merits; (3) whether the party against whom collateral estoppel is asserted was a party or was in privity with a party to the prior adjudication; and (4) whether the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior suit. Oates v. Safeco Ins. Co. of America, 583 S.W.2d 713, 719 (Mo. banc 1979).

The doctrine of collateral estoppel does not apply. Andrew's arguments rest upon the assumption that the "prior adjudication" was Judge Normile's ruling in the personal injury case that the household exclusion did not apply to Andrew because he did not live with Todd. Andrew misperceives the "prior adjudication." Judge Normile's ruling was made in response to State Farm's motion for leave of counsel to withdraw in the personal injury case. The ruling did not result in a judgment on the merits. There is only one prior judgment--the judgment in the personal injury case finding Todd negligent and awarding damages to Andrew. Further, the question of whether Andrew is precluded from recovering under the household exclusion is irrelevant to the question of Todd's liability to Andrew. State Farm was not a party in the personal injury case. State Farm did not have a full and fair opportunity to litigate the issue of whether the household exclusion applied to Andrew; in the personal injury case State Farm was merely defending Todd. To summarize, the issues in the personal injury and the garnishment actions were not identical, the parties were not identical, Judge Normile's ruling on the household exclusion was not a judgment on the merits, and State Farm did not have a full and fair opportunity to litigate the issue of the household exclusion. Collateral estoppel does not bar State Farm's raising the household exclusion as a defense in the garnishment action.

Andrew also contends that State Farm is barred by the doctrine of res judicata from raising the household exclusion defense in the garnishment action because of the judgment in the declaratory judgment action that Todd was a permissive user. Again, Andrew undertakes no analysis under a res judicata theory; he focuses instead upon the elements of collateral estoppel. Because the household exclusion issue was not decided in the declaratory judgment action, State Farm is not collaterally estopped from litigating the issue in the garnishment action.

Andrew further asserts that the rulings of Judge Normile in the personal injury action regarding automobile policy's household exclusion are the law of the case in the garnishment action, and, therefore, cannot be addressed by this Court. The "law of the case" doctrine governs successive adjudications involving...