State Farm Fire & Cas. Co. v. Century Home Components, Inc.

Decision Date27 May 1976
Citation275 Or. 97,550 P.2d 1185
PartiesSTATE FARM FIRE AND CASUALTY COMPANY et al., Respondents, v. CENTURY HOME COMPONENTS, INC., a corporation, Appellant.
CourtOregon Supreme Court

Darst B. Atherly of Thwing, Atherly & Butler, Eugene, argued the cause for appellant. With him on the briefs were John C. Sihler and Samuel G. Wilson, Eugene.

Paul D. Clayton, Eugene, argued the cause for respondents State Farm Fire and Cas. Co., David Lindahl and Ann Lindahl, and Aero-Mayflower Transit Co., Inc; Richard K. Smith and Prudence H. Smith; Kenneth C. Becker and Marie L. Becker; and Lucile E. Parks. With him on the brief were Ralph F. Cobb and Luvaas, Cobb, Richards & Frazer, Eugene.

Arthur C. Johnson, Eugene, argued the cause for respondents Walter L. Olson and Karen Olson; Earl R. gilmore, Jr., and Eva M. Gilmore; John Meek and [275 Or. 100-A] Linda Meek; Gene P. Moritz and Theresa Moritz; James T. Potter and Mary C. Potter; Elmer R. Smith and Rollina R. Smith; Charles W. Fidler and Ann Fidler; and Wallace Ruff and Ruth Ruff. With him on the brief were John B. Arnold, Leslie Swanson, and Johnson, Johnson & Harrang, Eugene.

Darrell L. Johnson of Bullivant, Wright, Leedy, Johnson, Pendergrass & Hoffman, Portland, filed a brief as amicus curiae.


HOLMAN, Justice.

Defendant appeals from judgments entered in 13 actions for damages resulting from a fire. These actions were among 48 cases consolidated for a single hearing in the court below on the issue of collateral estoppel. The ruling of the trial court that defendant was collaterally estopped from contesting liability in each of the 48 actions forms the basis for defendant's appeal.

The fire giving rise to this litigation started early one Sunday morning in the summer of 1968. Defendant constructed prefabricated housing in a large shed. Plaintiffs' property was stored in a warehouse which was located approximately 60 feet from defendant's shed and which was connected thereto by a wooden loading dock. On the side of defendant's shed was a wooden box, called a skip box, into which sawdust from a neighboring saw was customarily deposited. On the Saturday evening preceding the fire, defendant's janitor had dumped a mix of linseed oil and dry sawdust into the box. No employees were present at the time the fire started. Whatever its cause and point of origin, and these are in dispute, the fire spread via the loading dock and caused substantial damage to defendant's shed, the warehouse and its contents.

Shortly thereafter various actions, eventually totaling over 50, were filed against defendant to recover for losses from the fire. Three of these actions proceeded separately through trial to final judgment. In each case the plaintiffs alleged essentially that defendant was negligent with respect to both the start and spread of the fire. The first case to come to trial resulted in a jury verdict for defendant. On appeal this court reversed the judgment for error in failing to compel defendant to produce a statement needed by the plaintiff for purposes of impeaching a defense witness, and remanded for a new trial. Pacific N. W. Bell v. Century Home, 261 Or. 333, 491 P.2d 1023, 494 P.2d 884 (1972). During the pendency of the foregoing appeal the second case was tried and produced another jury verdict for defendant. Sylwester v. Century Home Components, Inc., No. 92582 (Circuit Court of Oregon for Lane County). No appeal was taken from that judgment and it became final. Shortly thereafter the third case was tried and a jury verdict was returned for the plaintiff. This judgment was affirmed on appeal. Hesse v. Century Home, 267 Or. 53, 514 P.2d 871 (1973). The Pacific N. W. Bell case was subsequently retried, this time to the court sitting without a jury, and the court found for the plaintiff. We affirmed on appeal, Pacific N. W. Bell v. Century Home, 267 Or. 46, 514 P.2d 874 (1973).

Following entry of final judgment in both Hesse and Pacific N. W. Bell, the present plaintiffs filed amended and supplemental complaints, conforming their allegations to those in the foregoing cases, and asserted that the judgments therein should operate to preclude defendant from again litigating the question of liability. Defendant alleged in defense that it would be unfair to bar relitigation in view of the similarity of issues between those cases and Sylwester and of the existence of the jury verdict and judgment in defendant's favor in Slywester. In the consolidated hearing on the question of collateral estoppel the parties submitted the records and transcripts of all three cases. The trial court rendered its ruling in favor of plaintiffs, finding Inter alia:

'* * * That the allegations of the second amended and supplemental complaint raising the issue of collateral estoppel have been established by the greater weight of the evidence, and that the affirmative allegations of the answer thereto have not been established by the evidence. * * *.'

To summarize the posture of these cases, the question of defendant's negligence has been tried four times and three final judgments have been rendered. Defendant has procured one favorable judgment (and two jury verdicts) and the claimants have received two judgments. The present plaintiffs, who were not parties to any of the previous actions, seek to utilize the prior claimants' judgments to establish conclusively defendant's negligence and its responsibility for any loss caused by the fire.

Our point of departure is our decision in Bahler v. Fletcher, 257 Or. 1, 474 P.2d 329 (1970). In Bahler we discarded the requirement of mutuality as a prerequisite to collateral estoppel because 'mutuality is not a relevant basis on which to determine the finality of litigation.' 257 Or. at 19, 474 P.2d at 338. We set forth two essential conditions for the application of collateral estoppel by a non-party against one who was a party to a prior action. First, there must exist an identity of issue between the prior action and the action in which estoppel is asserted; and second, the party against whom estoppel is sought must have had a full and fair opportunity to contest the issue decided adversely to him. 257 Or. at 20, 474 P.2d 329. We clearly recognized, however, that even when these two prerequisites are satisfied, 'the unlimited use of collateral estoppel by a person who was neither a party nor in privity with a party to the original litigation may, in some instances, lead to unfair results.' 257 Or. at 10, 474 P.2d at 334. We therefore counseled the courts to 'scrutinize with care any situation where collateral estoppel is asserted by a person who was neither a party nor in privity with a party to the first case, to make certain no unfairness will result to the prior litigant if the estoppel is applied.' 257 Or. at 19, 474 P.2d at 338.

Defendant does not challenge the trial court's conclusion that the issues in Hesse and Pacific N. W. Bell were identical with the issues in the present cases and that the question of defendant's negligence with respect to the cause and spreading of the fire was decided adversely to defendant in both actions. Nor does it deny, at least with respect to the second Pacific N. W. Bell trial, that it had a full and fair opportunity to litigate the issue of negligence. Defendant's only contention is that the trial court erroneously concluded that no unfairness would result from collaterally estopping defendant in the present circumstances.

[2,3] The parties disagree initially on the proper scope of appellate review, and we will take this opportunity to delineate both the obligations of the parties with respect to proof of collateral estoppel and the standard of appellate review. Plaintiffs contend we are bound by the trial court's ruling if it is supported by substantial evidence. We have frequently stated that the party asserting estoppel has the burden of proving the elements giving rise to it, E.g., Smejkal v. Rice, 75 Or., Adv.Sh. 4137, 4140, 543 P.2d 281 (1975); Holmgren v. Westport Towboat Co., 260 Or. 445, 451, 490 P.2d 739 (1971); Jarvis v. Indemnity Ins. Co., 227 Or. 508, 512, 363 P.2d 740 (1961), but this statement requires elaboration. Since collateral estoppel rests upon the principle that an issue was actually decided and was necessary to the judgment in a prior action, the party asserting estoppel bears the responsibility of placing into evidence the prior judgment and sufficient portions of the record, including the pleadings, exhibits, and reporter's transcript of the testimony and proceedings, to enable the court to reach that conclusion with the requisite degree of certainty. See Gaul v. Tourtellotte, 260 Or. 14, 17, 488 P.2d 416 (1971); Burnett v. Western Pac. Ins. Co., 255 Or. 547, 556--57, 469 P.2d 602 (1970); State v. George, 253 Or. 458, 463--64, 455 P.2d 609 (1969). If the materials submitted are inadequate to permit the court to ascertain an identity of issue, the matters decided or the basis for decision in the prior action, the party seeking estoppel cannot prevail. Compare Jones v. Flannigan, 270 Or. 121, 127--28, 526 P.2d 543 (1974) With Jones v. Flannigan, 75 Or.Adv.Sh. 3893, 3894, 542 P.2d 907 (1975). See also State v. Hoare, 20 Or.App. 439, 532 P.2d 240 (1975). The fact that the party asserting estoppel bears the burden of proof does not mean, however, that the trial court's ruling on the evidence submitted is entitled to any special deference on appeal. Whether the issues are identical and whether a particular matter was actually decided are questions of law for the court. Meyers v. Burwell 271 Or. 84, 89, 530 P.2d 833 (1975). 1 Consequently, the question on review is whether the evidence is sufficient as a Matter of law to establish the elements of collateral estoppel.

[4-6] Once the court has concluded that the evidence is sufficient to establish that...

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