State Farm Mut. Auto. Ins. Co. v. Glasgow

• Decision Date: 05 June 1985
• Docket Number: No. 4-1283A432,4-1283A432
• Citation: 478 N.E.2d 918
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant (Garnishee Defendant Below), v. Kara GLASGOW (Plaintiff Below) and Gerald Weist, Jr. (Defendant Below), Appellees.
• Court: Indiana Appellate Court

Page 918

478 N.E.2d 918

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant (Garnishee Defendant Below), v. Kara GLASGOW (Plaintiff Below) and Gerald Weist, Jr. (Defendant Below), Appellees.

No. 4-1283A432.

Court of Appeals of Indiana,

Fourth District.

June 5, 1985.

Kelvin L. Roots, Patrick Wilkinson Goeller & Modesitt, Terre Haute, for appellant (Garnishee defendant below).

Robert D. Hepburn, Cox Zwerner Gambill & Sullivan, Terre Haute, for appellees.

MILLER, Presiding Judge.

On November 10, 1983, the plaintiff-appellee, Kara Glasgow, filed a small claims action in the Vigo County Court against Gerald Weist, Jr., judgment-defendant and appellee. The small claims notice alleged that Weist had caused damage to Glasgow's automobile in an incident at a filling station in which Weist's car collided with Glasgow, but the notice did not state a Glasgow then filed for proceedings supplemental to execution of the judgment, seeking recovery from State Farm as Weist's insurer. See Ind.Rules of Procedure, Trial Rule 69(E). The special judge who presided over the proceedings supplemental heard evidence from State Farm, over Glasgow's objection, in support of State Farm's contention that Weist had intentionally caused the damage to Glasgow's car and that the claim, therefore, was not covered by Weist's insurance policy. The special judge took Glasgow's objection to this evidence under advisement and, on October 20, 1983, entered the following findings of fact and conclusions of law:

theory of recovery. State Farm Mutual Automobile Insurance Company, garnishee-defendant and appellant, was Weist's insurer and had notice of the claim against Weist but refused to defend him, claiming Weist deliberately and intentionally drove his car into Glasgow's. At the conclusion of the small-claims trial on March 3, 1983, the trial judge stated from the bench that damage to Glasgow's car had been caused by Weist's negligent acts, and that he would enter judgment accordingly. The trial court's order book entry recording this judgment, however, did not include any finding of negligence, but merely found for the plaintiff and against the defendant, assessing judgment against Weist in the sum of $850.00.

"[FINDINGS OF FACT]

1. Claimant filed a small claim against Defendant on November 10, 1982, alleging that Defendant caused damage to Claimant's automobile which small claim 'notice' does not specify a legal theory.

2. That at all times material to this action, Defendant was an 'insured party' under a policy of liability insurance issued by Garnishee Defendant, State Farm Mutual Automobile Insurance Company (hereinafter 'State Farm').

3. State Farm had notice of this action and chose not to provide a defense for Defendant.

4. That State Farm waived all policy defenses by its statement of contentions filed herein other than that the act of the Defendant was 'intentional' and therefore outside the scope of the policy.

5. That a 'hearing' was held before the Honorable John Kite on the 3rd day of March, 1983, and the Court entered judgment in favor of the Claimant and against the Defendant in the sum of $850.00 '... as a result of the negligent acts of Mr. Weist ...' Judgment was entered accordingly.

6. That more than sixty (60) days elapsed thereafter and State Farm did nothing until such time as it was made a party to the instant litigation and proceeding supplemental.

7. That this Court is without jurisdiction to change the special finding of negligence of the Honorable John Kite for the reason that the only course to a person aggrieved by special finding is the filing of a Motion to Correct Errors and an Appeal to the Indiana Court of Appeals.

8. That State Farm's policy provides coverage for the negligence of its insured and is an asset available to the Defendant from which Claimant's judgment may be satisfied.

CONCLUSIONS OF LAW

1. That Claimant recovered judgment against Defendant on March 3, 1983, as a result of the 'negligence' of the Defendant.

2. That at all times material hereto, State Farm had a liability policy covering Defendant's negligent acts which policy is an asset from which Claimant's judgment may be satisfied.

3. That State Farm owes Claimant the sum of $850.00 plus the statutory interest from March 3, 1983, plus the costs of this action.

Judgment accordingly."

(R. 126-27).

State Farm filed a timely motion to correct errors, which the special judge denied. Attached to the order denying the motion was the following memorandum, signed by the special judge.

"MEMORANDUM

Having reviewed Garnishee Defendant's Motion to Correct Errors, the Court is unpersuaded that the Special Judge is being asked to do anything other than reverse a special finding that was made by the regularly sitting Judge of the Court. Garnishee Defendant, State Farm Mutual Automobile Insurance Company (hereinafter 'State Farm') admits (during the Pre-Trial Conference) that it had notice of the litigation and made a determination not to defend, not to defend under reservation of rights, or hire counsel to protect the interest of its insured. Neither has it asked to intervene nor has it filed a declaratory judgment. The Court's ruling is simply that the Special Judge does not sit as a Court of review in proceedings following the expiration of the sixty (60) day limit for the filing of a Motion to Correct Errors. For the reasons stated in the Findings of Fact and Conclusions of Law with this amplification, I have ruled as I did."

(R. 136).

On appeal, State Farm argues that the above findings of fact, conclusions of law and memorandum make it clear that the special judge believed that the trial court in the underlying tort action made a "special finding" that Weist's negligence caused Glasgow's damages, and that both he and State Farm were bound by the finding of negligence. The result, State Farm argues, is that the special judge refused to consider the evidence that Weist acted intentionally in causing Glasgow's damages, going no farther than to rely on the "special finding of negligence" made in the underlying tort action. As a consequence, State Farm contends, the special judge erroneously concluded that State Farm was liable to Glasgow under the terms of the policy insuring Weist. ¹

As briefed by the parties, the issues on appeal are:

I. Whether State Farm was collaterally estopped from litigating the issue of whether Weist acted negligently or intentionally in causing Glasgow's damages? ²

II. Whether the evidence was sufficient to support the judgment of the special judge in the proceedings supplemental?

Additional facts will be recited where relevant. We reverse and remand for further proceedings.

I.

In cases such as this, where the special judge entered findings of fact on his own motion, this court will not set aside such findings unless clearly erroneous. T.R. 52(A); Baker v. Compton (1983), Ind.App., 455 N.E.2d 382. On the other hand, when the error complained of is the correctness of the trial court's application of the law, we must correctly apply the law to the findings made by the trial court. Brokus v. Brokus (1981), Ind.App., 420 N.E.2d 1242. State Farm's initial allegation of error--that the special judge erred in holding the issue of Weist's negligent or intentional conduct conclusively decided by the "special finding" of negligence in the underlying tort action--is directed at the special judge's Finding of Fact number 7, supra. This finding, however, is unmistakably a mix between a finding of fact (that the trial judge in the underlying tort action made a "special finding of negligence") and a conclusion of law (that State Farm was collaterally estopped from litigating the question of whether Weist acted negligently or intentionally in causing Glasgow's damages, see supra, n. 2). State Farm's first allegation ultimately implicates both the finding of fact element as being clearly erroneous and the conclusion of law element as being based on the special judge's misapplication of the law to the facts found. We must determine whether the special judge committed an error of law in making this finding of fact or in reaching this conclusion of law. ³ Baker v. Compton, supra; Brokus v. Brokus, supra.

Collateral estoppel--also known as "issue preclusion" and "estoppel by verdict"--applies "when a particular issue is adjudicated and then is put into issue in a subsequent suit on a different cause of action between the same parties or those in privity with them." State v. Speidel (1979), 181 Ind.App. 448, 452, 392 N.E.2d 1172, 1175. An additional requirement to the application of collateral estoppel is that there must be "mutuality of estoppel" between the party asserting the doctrine and the party against whom it is asserted. Id. "Estoppel is mutual if the one taking advantage of the prior adjudication would have been subsequently bound had the prior judgment gone the other way." Id. at 456, 392 N.E.2d at 1177. For purposes of this case, we assume, though we do not decide, that State Farm was in privity with Weist, see Snodgrass v. Baize (1980), Ind.App., 405 N.E.2d 48, 51 (indemnitor generally considered in privity with indemnitee), and that mutuality of estoppel existed between Glasgow--the party allegedly asserting collateral estoppel--and State Farm--the party allegedly estopped.

Citing Snodgrass v. Baize, supra, State Farm argues that collateral estoppel does not apply to the present case because there existed a conflict of interest between State Farm and Weist, its insured. In Snodgrass, the plaintiff sued the insured, alleging in alternative counts that the insured shot him intentionally or negligently. The insurance company initially entered an appearance on the insured's behalf, but, upon perceiving a conflict of interest, withdrew from the case and paid the insured's personal attorney's fee. The insurer's attorney spelled out its position concerning the conflict and its non-waiver of...