Donald AUFDERHAR, Jr. Appellant, v. DATA DISPATCH, INC. and John Schuck, Respondents, and Westfield Insurance Companies, Intervenor.
No. C7-88-2006
Supreme Court of Minnesota
March 9, 1990
452 N.W.2d 648
In count two, the Director alleges that a client retained respondent to prepare a premarital agreement; respondent either failed to have the agreement witnessed in accordance with Minnesota law or lost the witnessed copy of the agreement; the same client subsequently retained respondent to prepare a deed conveying certain real property; respondent prepared the deed but never successfully filed the deed with the County Recorder‘s Office and, when asked by the client to turn over the deed, respondent did not do so.
In count three, the Director alleges that the respondent failed on three occasions to respond to requests by the Director‘s Office and the District Ethics Committee that he respond to the above allegations. Furthermore, it is relevant that the Director‘s Office has disciplined respondent on previous occasions for his conduct in three different matters in which, among other things, he failed to communicate with his clients.
After the filing of the petition, respondent entered into a stipulation for discipline with the Director. In the stipulation, the respondent waived all of his procedural rights to hearings as provided in
The Court, having considered all of the facts and circumstances surrounding this matter, the petition of the Director, and the stipulation of the parties, NOW ORDERS:
- That the respondent, Michael J. Gillen, is hereby indefinitely suspended pursuant to
Rule 15 of the Rules on Lawyers Professional Responsibility for misconduct including failure to competently advise clients, failure to communicate with clients, failure to surrender client property upon termination of representation, and failure to cooperate with the Lawyers Professional Responsibility Board. - Any future re-instatement is conditioned upon:
- Compliance with the requirements of
Rule 18, Rules on Lawyers Professional Responsibility . - Compliance with
Rule 26, Rules on Lawyers Professional Responsibility . - Satisfaction of Continuing Legal Education requirements pursuant to
Rule 18(e), Lawyers Professional Responsibility . - Furnishing proof of psychological fitness to practice law.
- Compliance with the requirements of
- That the respondent shall pay to the Director within 90 days of the date of this order, the sum of $750 in costs and disbursements pursuant to
Rule 24, Rules on Lawyers Professional Responsibility .
John W. Wood, Jr., Johnson, Wood, Phleger & Bigelow, Wayzata, for appellant.
Wayne J. Studer, Brian G. Larson, Larry J. Peterson & Associates, St. Paul, for respondents.
The question presented by this case is whether a defendant in a common law motor vehicle negligence action may invoke the doctrine of collateral estoppel to prevent the common law plaintiff from relitigating the amount of his personal injury damage claim when that precise issue had been previously determined in an uninsured motorist arbitration hearing between the plaintiff and the uninsured motorist insurance carrier. We hold that within the factual posture presented by this case the plaintiff may be collaterally estopped.
The material facts are not in dispute. On a March day in 1985 in bad weather, appellant Donald Aufderhar, Jr., was involved in a three-car accident on a ramp leading from the Rosedale Shopping Center. As it proceeded immediately ahead of the Aufderhar car, an unidentified vehicle spun out of control and blocked ramp traf-
Aufderhar carried uninsured motorist insurance with Westfield Insurance Companies (Westfield) on the vehicle he was driving. In due course Aufderhar submitted a claim to Westfield seeking recovery of uninsured motorist benefits. Simultaneously, he commenced this common law personal injury negligence action against respondents Data Dispatch and Schuck. After Westfield initially refused Aufderhar‘s request for binding arbitration under the policy, with denial based on a provision contained in the uninsured motorist coverage, Aufderhar applied for and obtained an order from the Hennepin County District Court mandating arbitration.
The trial of this personal injury action was originally scheduled for May 16, 1988, but unavailability of judges delayed the trial until August 16, 1988. Meanwhile, on May 18, respondents Data Dispatch and Schuck tendered an offer of judgment for $15,000 plus costs which Aufderhar rejected.
The arbitration hearing before a panel of three lawyers specializing in the handling of personal injury litigation was held on May 25, 1988. The arbitrators unanimously found the unidentified phantom driver to be 10 percent causally negligent; Schuck to be 90 percent causally negligent; assessed Aufderhar‘s personal injury damages at $15,000; and ordered Westfield to pay the entire amount to Aufderhar, which it subsequently did. This was in addition to no-fault benefits of approximately $12,000 already paid.
Thereafter, in this court negligence action, respondents Schuck and Data Dispatch just before trial moved in limine for an order that Aufderhar be collaterally estopped from relitigating the amount of damages issue. The trial court granted the motion, and later, after subrogation issues between Westfield and Data Dispatch had been settled, dismissed the action. Aufderhar appealed. The court of appeals panel affirmed the trial court. Aufderhar v. Data Dispatch, 437 N.W.2d 679 (Minn.App. 1989).
Collateral estoppel, sometimes referred to as issue preclusion, precludes parties from relitigating issues which are identical to issues previously litigated and which were necessary and essential to the former resulting judgment. Ellis v. Minneapolis Comm‘n on Civil Rights, 319 N.W.2d 702, 704 (Minn.1982). Although some jurisdictions require “mutuality” of parties in cases involving previously determined litigation as a predicate to the invocation of collateral estoppel, Minnesota does not. Even though a defendant in the proceeding before the court was not a party to the earlier proceeding, Minnesota permits a defendant to invoke collateral estoppel in the subsequent litigation commenced by a plaintiff who also had been the claimant in the earlier proceeding provided four requirements have been established:
(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.
Ellis, 319 N.W.2d at 704 (quoting Victory Highway Village, Inc. v. Weaver, 480 F.Supp. 71, 74 (D.Minn.1979)).
In this case, Data Dispatch and Schuck, who seek to invoke collateral estoppel, were strangers to the arbitration proceeding between Aufderhar and Westfield. So, too, was the defendant in Johnson v. Consolidated Freightways, Inc., 420 N.W.2d 608 (Minn.1988), a stranger to an arbitration between an insured and his uninsured motorist insurer. In that case Robert Lundquist sustained personal injuries and his wife Karen Kay Lundquist died
Appellant suggests that Consolidated Freightways supports his contention that an arbitration award is not a “prior adjudication.” Most courts have considered an arbitration award to constitute a “prior adjudication” for purposes of triggering an estoppel. See, e.g., United Food and Commercial Workers Int‘l Union-Indus. Pension Fund v. G. Bartusch Packing Co., 546 F.Supp. 852, 855 (D.Minn.1982). We, likewise, have afforded to an arbitration award finality as to both facts and the law. State, by Sundquist v. Minnesota Teamsters Public and Law Enforcement Employees Union Local No. 320, 316 N.W.2d 542, 544 (Minn.1982); Grudem Bros. Co. v. Great Western Piping Corp., 297 Minn. 313, 316-17, 213 N.W.2d 920, 922-23 (1973).1 Even in Consolidated Freightways, after we first observed that collateral estoppel had been applied to prevent relitigation of issues decided in other types of proceedings, which, like arbitration, are less structured and formal than traditional court actions, we further acknowledged that “arbitration is meant to be a final judgment of both law and fact.” Consolidated Freightways, 420 N.W.2d at 613.
Had the responsible party been present at the arbitration in Consolidated Freightways (the trucking company), it could, and probably would have presented relevant evidence on the comparative fault issue. In contrast, here the presence of Schuck and Data Dispatch was neither necessary nor, perhaps, even relevant to Aufderhar‘s full and complete presentation of damage evidence in the arbitration proceeding. Indeed, had they been present in the arbitration proceeding, their participation might well have resulted in a lower damage award. Additionally, we note that Aufderhar received all of his personal injury damages from Westfield even though the arbitrators found that the unidentified and uninsured motorist was only 10 percent causally negligent. Finally, the damages awarded resulted from an arbitration originally initiated by Aufderhar, insisted upon by Aufderhar in the face of objection by Westfield, and concluded only after Aufderhar had secured a district court order compelling it. See Lysholm v. Liberty Mut. Ins. Co., 404 N.W.2d 19, 21 (Minn. App.1987) (“plaintiffs by acquiescing in and participating in the [arbitration] proceeding in effect represented that the contract provision for arbitration was in force, that the dispute was arbitrable, and that the parties would be bound by the decision * * *“) (quoting Twomey v. Durkee, 291 N.W.2d 696, 699 (Minn.1980)). Here, the arbitration clause in Aufderhar‘s uninsured motorist coverage provided that the arbitration award would be “binding * * * as to the amount of damages.” Both the damages issue, and the party to be estopped, Aufderhar, were identical in the arbitration and at trial. Thus, we conclude that if appellant was afforded a full and fair opportunity to present evidence on the damage issue before the arbitrators, he should now be estopped from relitigating that identical issue in this court case. To so hold is consistent with the
But was Aufderhar afforded a full and fair opportunity to present evidence on the amount of damage issue? We are left with no doubt that he was. Before the arbitration panel Aufderhar was represented by the same attorney as at trial. His attorney, in essence, concedes that full opportunity to provide evidence relative to damages was afforded and that the evidence he had relative to the issue was presented. The arbitration clause provided for arbitration under legal rules of procedure and evidence. The case was heard by experienced personal injury attorneys. No claim2 is made that Aufderhar was denied the opportunity to present any damage evidence or rebuttal of any contrary evidence. No facts in the record lend substance to any assertion to the contrary. Therefore, in our view, this is a proper case calling for estoppel from any attempt to relitigate that issue.
Nor is it material that Data Dispatch and Schuck were not parties to the arbitration. As previously noted, Minnesota rejects the “mutuality” requirement some jurisdictions have imposed upon the use of collateral estoppel. Instead, Minnesota focuses upon whether the party sought to be estopped was the claimant on the issue in both proceedings. Our rationale for abandonment of the “mutuality” rule is set forth in Gammel v. Ernst & Ernst, 245 Minn. 249, 72 N.W.2d 364 (1955).
[A] plaintiff, who has selected his forum and presented his proof on an issue is bound by the judgment rendered therein on such issue in any subsequent action, even though against another party, since public policy should not permit retrial of an issue each time a new defendant can be found. * * * “The requirement of mutuality must yield to public policy. To hold otherwise would be to allow repeated litigation of identical questions, expressly adjudicated, and to allow a litigant having lost on a question of fact to re-open and re-try all the old issues each time he can obtain a new adversary not in privity with his former one.”
Gammel, 245 Minn. at 257-58, 72 N.W.2d at 369 (quoting Coca Cola v. Pepsi Cola, 36 Del. 124, 133, 172 A. 260, 263 (Del.Super. Ct.1934)).
In this case, the “claimant” in the arbitration, and the plaintiff at trial are one and the same. Because it is clear Aufderhar was afforded “a full and fair opportuni-
But, Aufderhar argues, to so hold runs counter to two of our cases which held that a prior court action did not have res judicata or collateral estoppel effect in a later arbitration proceeding. See Milwaukee Mut. Ins. Co. v. Currier, 310 Minn. 81, 245 N.W.2d 248 (1976); Nat‘l Indem. Co. v. Farm Bureau Mut. Ins. Co., 348 N.W.2d 748 (Minn.1984). We disagree. A close examination of each case demonstrates that the holding in neither, by analogy or otherwise, supports appellant‘s argument.
The issue in Milwaukee Mutual was whether the parties had agreed that the prior trial court adjudication would take the place of arbitration, and, therefore, had waived their contract right to arbitrate. Had they waived that right by their actions, no agreement to arbitrate would have existed resulting in lack of jurisdiction in the court to stay arbitration under
In National Indemnity, we expanded on that holding in a case where the right to arbitration arose by statute rather than from a contractual agreement. The dispute in National Indemnity related to indemnity between two insurers pursuant to
Although the issue had not been raised in briefs nor in oral argument by either party, during the course of the oral argument, a question arose as to whether Aufderhar‘s insistance upon arbitration of, among other issues, the amount of damage issue had resulted in a waiver of any constitutional right he might have had to a jury trial on that issue. Under amendment VII to the
Although appellant failed to raise the issue in his petition for further review, in his brief and at oral argument he argues that the trial court erred in considering respondents’ motion in limine just prior to the commencement of trial. We reject that assertion for two reasons: first, that issue is not properly before this court because not raised in the petition for further review; and, second, because the trial court‘s handling resulted in no unfairness to the appellant.
Generally, we may refuse to consider new issues independent of the affirmative relief requested in the petition for further review unless the claim has been included therein. See Rambaum v. Swisher, 435 N.W.2d 19, 24 (Minn.1989); Hoyt Inv. Co. v. Bloomington Commerce and Trade Center Assocs., 418 N.W.2d 173, 175 (Minn.1988). The relief requested by this belatedly asserted issue is independent of the substantive issue presented in the petition for further review. Therefore, we need not address it.
Moreover, even were we to address the issue, it appears that appellant‘s contention lacks merit. He argues that because collateral estoppel is an affirmative defense to be raised by answer, see
Affirmed.
YETKA, Justice (dissenting).
I would reverse the court of appeals and find that the plaintiff is not barred by collateral estoppel from trying his action in the district court.
In Johnson v. Consolidated Freightways, Inc., 420 N.W.2d 608, 613 (Minn.1988), we declined to determine whether, as a matter of law, collateral estoppel applies to an issue determined in insurance arbitra-
Such an injustice is present here. Even if the parties to the arbitration waived a later trial, why should such waiver benefit third parties who were not parties to the original arbitration? Insurance carriers could abuse the ruling of the court in this case by placing mandatory arbitration clauses in insurance policies. If such clauses become standard, they could effectively deny the constitutional right to trial by jury: Plaintiffs would lose the option to litigate first and, therefore, the doctrine of collateral estoppel would preclude plaintiffs from presenting to a jury issues decided in arbitration. Although neither of the parties raised the issue of a potential denial of the right to a jury trial, we must bear it in mind in future cases.
Moreover, the majority allows arbitrated issues to have collateral estoppel effect in later litigation even though previously litigated issues do not have collateral estoppel effect in a later arbitration according to Milwaukee Mutual Ins. Co. v. Currier, 310 Minn. 81, 245 N.W.2d 248 (1976). As a practical consequence of this holding, plaintiffs who expect an unfavorable arbitration finding will maneuver to set trial before arbitration. That certainly would not save the court‘s time or the parties’ money and, indeed, would defeat the very purpose of arbitration to serve as an alternative to litigation. Further, it seems basically unfair where, in a situation as here, the court trial, for some reason, is delayed until after the arbitration date, thus forcing plaintiffs to maneuver to postpone the arbitration in order to avoid waiving their right to a jury trial on the issue of damages.
For all of these reasons, I would reverse the court of appeals.
WAHL, Justice (dissenting).
I join the dissent of Justice Yetka.
STATE of Minnesota, Respondent, v. Billy Richard GLAZE, Appellant.
No. CX-89-583.
Supreme Court of Minnesota.
March 16, 1990.