798 N.W.2d 715
Wis. Ct. App.2011Background
- AEGIS seeks indemnification from Arby under the WPS-Arby indemnification contract after the Brooks action.
- The Brooks action was a wrongful death/personal injury case arising from explosions while Arby performed work for WPS.
- AEGIS admitted it issued an excess indemnity policy covering WPS in Brooks.
- In Brooks, WPS cross-claimed against Arby; WPS and AEGIS filed a joint answer raising indemnification as a defense; AEGIS filed an answer incorporating insureds’ defenses.
- The Brooks action settled; the dismissal order stated all issues and most claims were resolved on merits with prejudice, except specific claims referenced in the order.
- After Brooks, WPS and AEGIS sued Arby for indemnification; Arby moved to dismiss under claim preclusion; the circuit court dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is AEGIS’s prior defense the functional equivalent of a cross-claim? | AEGIS asserts no cross-claim was filed against Arby. | Arby argues the affirmative defense is equivalent to a cross-claim for indemnification. | Yes; defense is cross-claim equivalent and preclusion applies. |
| Are cross-claims generally permissive and not mandatory to plead? | Cross-claims are not mandatory; AEGIS did not file a cross-claim. | Cross-claims are permissive; failure to plead does not bar related claims. | Cross-claims are permissive; however substance shows adverse parties and indemnity issue. |
| Did the Brooks stipulated dismissal constitute a final judgment on the merits as to AEGIS’s indemnity claim? | AEGIS contends the dismissal did not specifically adjudicate its indemnity claim. | The order dismissed all issues on the merits with prejudice except as to referenced claims. | Yes; the three elements of claim preclusion are met. |
| Do identity of parties and causes of action exist for claim preclusion here? | Identity not satisfied due to labeling as defense, not cross-claim. | Substance shows parties adverse and the indemnity claim as the same cause of action. | Yes; identity is satisfied by the substance of the prior defense. |
Key Cases Cited
- Wickenhauser v. Lehtinen, 302 Wis. 2d 41, 734 N.W.2d 855 (2007 WI 82) (set forth elements of claim preclusion and permissiveness of cross-claims)
- Bakula v. Schwab, 167 Wis. 546, 168 N.W. 378 (1918) (adverse-parties concept and compulsory counterclaim rationale)
- U.S. Fidelity & Guaranty Co. v. Goldblatt Bros., 142 Wis. 2d 187, 417 N.W.2d 417 (Ct. App. 1987) (adverse-in-prior-action requirement for claim preclusion; environments with co-plaintiffs)
- Heinz Plastic Mold Co. v. Continental Tool Corp., 114 Wis. 2d 54, 337 N.W.2d 189 (Ct. App. 1983) (cross-claims permissive and analogized to federal rule)
- Great Lakes Trucking Co. v. Black, 165 Wis. 2d 162, 477 N.W.2d 65 (Ct. App. 1991) (final judgment on the merits may be a stipulated judgment)