Plaintiff-appellant Islebia Dorrance appeals from the circuit court order granting the motion for summary judgment brought by defendant-appellee Kendrick Lee.. The central issue on appeal is whether the doctrine of collateral estoppel bars relitigation of an issue previously litigated and determined in a prior action. Here, the prior action was submitted to the Court Annexed Arbitration Program (CAAP), 1 resulting in the Arbitration Award being entered as a final judgment.
On appeal, Dorrance asserts that the circuit court erroneously granted summary judgment. For the reasons discussed infra, we affirm the circuit court’s order granting Lee’s motion for summary judgment.
I. BACKGROUND
On April 9,1996, Dorrance was driving her motor vehicle along Wai'alae Avenue, in Honolulu. Accompanying Dorrance was her mother, Usulina Cintron. As she was negotiating a left turn onto 6th Avenue, Lee’s automobile struck Dorrance’s automobile [hereinafter, the 1996 accident]. Both Dor-rance and Cintron suffered various injuries as a result of the accident.
On March 18, 1997, Cintron filed a complaint against Dorrance and Lee, alleging that both were negligent in causing her injuries [hereinafter, the Cintron Action]. Both Dorrance and Lee filed answers to Cintron’s
1.Liability — The Arbitrator determines that Comparative Negligence is in issue and finds as follows:
% of NegHgence of Plaintiff [Cintron] 0%
% of Negligence of Defendant Dorrance 70%
% of Negligence of Defendant Lee 30%
Total 100%
The Arbitration Award was served on the parties on March 12, 1998. Thereafter, each party had twenty days to appeal the award and request a “trial de novo ” in the circuit court. See Rule 21 of the Hawai'i Arbitration Rules (HAR) (1998), discussed infra. The Arbitration Award was not appealed, and, accordingly, the circuit court entered final judgment on the award on April 7, 1998.
Prior to the issuance of the Arbitration Award, Dorrance initiated the present case on February 17, 1998, alleging that Lee was negligent in the operation of his motor vehicle, thereby causing her injuries arising from the 1996 accident. On May 14, 1998, Lee filed a motion for summary judgment, arguing that, because the arbitrator in the Cin-tron Action had determined Dorrance’s negligence to be larger than Lee’s negligence, HRS § 663-31 (governing contributory negligence), see infra, barred Dorrance from bringing suit against him. On August 10, 1998, the circuit court entered an order granting Lee’s motion for summary judgment, which stated, inter alia, that “Dor-rance’s claims [were] barred by the doctrine of res judicata and Section 663-31(a) and (e) of the Hawaii Revised Statutes.” On the same day, the circuit court entered final judgment in favor of Lee and against Dor-ranee, and Dorrance timely appealed.
II.STANDARDS OF REVIEW
Under the Hawai'i Rules of Civil Procedure (HRCP), summary judgment should be entered “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” HRCP Rule 56 (1993). The evidence should be viewed in the light most favorable to the non-moving party.
Maguire v. Hilton Hotels Corp.,
Budget Rent-A-Car Systems, Inc. v. Ricardo,
“The interpretation of a rule promulgated by the courts involves principles of statutory construction.”
Cresencia v. Kim,
III.DISCUSSION
A. Judgment Based Upon An Arbitration Award Is A Final Judgment Which Can Have Collateral Estoppel Effect.
On appeal, Dorrance essentially maintains that the circuit court improperly relied upon the Arbitration Award as a basis for applying collateral estoppel. Lee, on the other hand, asserts that Dorrance is collaterally estopped from relitigating the apportionment of liability as set forth in the Arbitration Award, which was subsequently reduced to a final judgment.
HAR Rule 21 states:
If, after twenty (20) days after the award is served upon the parties, no party has filed a written Notice of Appeal and Request for Trial De Novo, the clerk of the court shall, upon notification by the Arbitration Administrator, enter the arbitration award as a final judgment of the court. This period may be extended by written stipulation, filed within twenty (20) days after service of the award upon the parties, to a period no more than forty (40) days after the award is served upon the parties. Said award shall have the same force and effect as a final judgment of the court in the civil action, but may not be appealed.
(Emphases added). Thus, based on its plain and unambiguous terms, HAR Rule 21 clearly contemplates that after an arbitration award has matured into a final judgment— and is entered accordingly by a circuit court — that judgment is entitled to be treated in all respects as any other judgment. In the present case, the parties in the Cintron Action did not appeal Arbitration Award, and, accordingly, on April 7, 998, the circuit court entered final judgment on the award.
The California Court of Appeals has interpreted a statute virtually identical to HAR Rule 21 in the context of an arbitration program substantially similar to the CAAP. In
State Farm Mutual Automobile Insurance Co. v. Superior Court,
In order to hold that a judgment entered upon an arbitration award did not judicially conclude those issues necessarily resolved by the arbitrator’s decision, we would have to ignore the express language of Code of Civil Procedure section 1141.23.[ 2 ] Had State Farm desired that the award given to plaintiffs by the judicial arbitrator not ripen into a formal civil judgment, with all of its attendant consequences, it needed only to cause its insureds, to whom it was providing a defense, to make a timely request for a trial de novo (Code Civ. Proc., § 1141.20). This, State Farm did not do. It should not now be heard, in the face of an express statutory declaration to the contrary, to argue that the resulting judgment is somehow entitled to less “force and effect" than the one which would have obtained had State Farm’s insureds timely sought such relief and proceeded to trial before a jury.
State Farm,
The policy goals émbodied in the CAAP support such a holding. This court, in
Richardson v. Sport Shinko (Waikiki Corp.),
In recent years, with the increase of civil litigation, escalating costs to the parties, and the strain on already scarce judicial resources, there is a dire need for prompt, equitable, and cost-efficient resolution of civil disputes before trial. A recent study entitled “Assessment of Civil Legal Needs of Low- and Moderate-Income People in Hawaii,” prepared for the Hawai'i Commission on Access to Justice by The Span-genberg Group of West Newton, Massachusetts, has determined that there has been and is a serious level of unmet legal needs among such families in Hawai'i because they simply cannot afford market-rate legal services. It is well-established that, in most instances, the longer a case is in litigation, the more expensive it is for the parties. Thus, we have recognized time and again that the “proclaimed public policy of our legislature is to encourage arbitration as a means of settling differences and thereby avoid litigation.” Leeward Bus Co. v. City & County of Honolulu,58 Haw. 64 , 71,564 P.2d 445 , 449 (1977) (citation omitted). Further, courts have realized that, “[b]y expediting the adversary process, arbitration promotes quicker settlement of cases thereby speeding up access to the courts[.]” Firelock Incorporated v. The District Court In and For the 20th Judicial District,776 P.2d 1090 , 1099 (Colo.1989) (citations omitted).
Id.
at 510,
Arguments to the contrary are not persuasive. For example, in
Flynn v. Gorton,
The doctrine of collateral estoppel is based on the premise that a thorough fact-finding process was completed in the first proceeding (Shell, Res Judicata and Collateral Estoppel Effects of Commercial Arbitration (1988) 35 UCLA L.Rev. 623, 648.) However, in judicial arbitration, the low monetary amount in controversy and the option of trial de novo can leave parties without a serious incentive to• litigate. Because the stakes involved are low, the parties may be willing to accept a compromise position without much of a fight. (See Mahon v. Safeco Title Ins. Co. (1988)199 Cal.App.3d 616 , 622,245 Cal.Rptr. 103 .)
Moreover, it is unlikely parties would expect a judicial arbitration award to have collateral estoppel effect in other proceedings where the stakes may be higher than they were in the arbitration proceeding. If they did, the result might be intensified litigation, delays and costs, as well as an increased rate of trial de novo election. Such a development would be directly contrary to the purposes underlying judicial arbitration legislation.
Id. (emphasis added).
We reject the
Flynn
court’s rationale. First, unlike the arbitration scheme in
Flynn,
the HAR impose a duty upon the parties “to participate in the arbitration hearing in a meaningful manner.” HAR Rule 28 (1998) (authorizing sanctions for failure to meaningfully participate in arbitration hearing). Second, the consequences of a failure to seek a trial
de novo
are clearly set forth in HAR Rule 21.
See
HAR Rule 21 (“Said award shall have the same force and effect as a final judgment of the court in the civil action[.]”). Third, the HAR provide adequate disincentives to requesting trial
de novo
and thus ensures that the parties take arbitration proceedings seriously and defend their rights accordingly.
See
HAR Rule 26 (1998);
Richardson,
B. Dorrance Is Collaterally Estopped From Relitigating The Arbitrator’s Apportionment Of Liability.
This court has repeatedly noted that
[ejollateral estoppel is an aspect of res judicata which precludes the relitigation of a fact or issue which was previously determined in a prior suit on a different claim between the same parties or their privies.... Collateral estoppel also precludes relitigation of facts or issues previously determined when it is raised defensively by one not a party in a prior suit against one who was a party in that suit and who himself raised and litigated the fact or issue.
Foytik v. Chandler,
In Momeau, this court established a three-prong test to determine whether the doctrine of res judicata (or collateral estop-pel as an included doctrine) bars relit-igation of an issue. Res judicata will bar relitigation where (1) the issue decided in the prior adjudication is identical with the one presented in the action in question, (2) there was final judgment on the merits, and (3) the party against whom res judica-ta is asserted was a party or in privity with a party to the prior adjudication.
Id.
at 315,
Specifically, claim preclusion prohibits a party from relitigating a previously adjudicated cause of action. Issue preclusion, or collateral estoppel, on the other hand, applies to a subsequent suit between the parties or their privies on a
different
cause of action and prevents the parties or their privies from relitigating
any issue
that was actually litigated and finally decided in the earlier action.
See Flynn v. Gorton,
To recognize that
res judicata
and collateral estoppel share common goals is not to say that they should necessarily be analyzed in exactly the same fashion. When a party seeks to prevent another party from relitigating a particular issue of fact or law— as opposed to an entire cause of action — we believe it prudent to require not only that the particular issue be one that was “decided in the prior adjudication,”
Bush,
Because determinations that are not essential to the judgment “have the characteristics of dicta[] and may not ordinarily be the subject of an appeal by the party against whom they were made[,]” we agree that the “interest in providing an opportunity for a considered determination ... outweighs the interest in avoiding the burden of relit-igation.”
Restatement (Second) of Judgments
§ 27 cmt. h (1980);
see also United States v. Weems,
Therefore, in light of these countervailing considerations, we now explicitly add to our traditional three-pronged test — for collateral estoppel purposes only — the additional requirement that the particular issue of fact or law that was decided in the prior adjudication be essential to the earlier valid and final judgment. Although this court has not explicitly required this element in the past, we have noted with approval formulations of the collateral estoppel test that have included an “essential to the judgment” element.
See Sentinel Ins. Co.,
We therefore hold that the doctrine of collateral estoppel bars relitigation of an issue where: (1) the issue decided in the prior adjudication is identical to the one presented in the action in question; (2) there is a final judgment on the merits; (3) the issue decided in the prior adjudication was essential to the final judgment; and (4) the party against whom collateral estoppel is asserted was a party or in privity with a party to the prior adjudication [hereinafter, the collateral es-toppel test]. In the instant action, Dorranee concedes that prong four of the collateral estoppel test has been satisfied. Accordingly, this court is left to determine whether the remaining elements have been met.
With respect to the first element of the collateral estoppel test, it is clear that Dorranee, against whom collateral estoppel is asserted, seeks to relitigate an issue that was decided in the previous suit. The record illustrates that the issue decided in the prior adjudication is identical to the one presented in the action in question. As stated previously, the issue Dorranee attempts to litigate here,
ie.,
whose negligence caused the 1996 accident and to what extent, was addressed and decided in the Cintron Action. In the present action, however, Dorranee argues that, insofar as she was a
defendant
in the Cintron Action but a
plaintiff
in the instant case, there is no identity of issues. This argument is meritless. As previously indi
cated,
Concerning the second element of the collateral estoppel test,
ie.,
that there be a final judgment
“on the merits,”
the record demonstrates that the final judgment was indeed “on the merits.” In the Cintron Action, both Dorrance and Lee (1) filed answers to the Cintron complaint, in which they denied all liability; (2) filed cross-claims against each other for contribution; (3) appeared and testified at the arbitration hearing, again denying their own negligence; and (4) submitted written post-hearing briefs arguing the issue of the other driver’s negligence. Where a party, such as Dorrance, had the opportunity to fully defend herself against claims of negligent driving — the same issue here — the final judgment from that proceeding was “on the merits.”
See Tradewind Ins. Co., Ltd. v. Stout,
Turning to the third element of the collateral estoppel test, it is obvious that the issue decided in the prior adjudication was essential to the final judgment. As previously noted, the Cintron Action involved a negligence claim by Cintron against Dorrance and Lee, alleging that both were negligent in causing her injuries. Accordingly, the issue of whose negligence caused the 1996 accident and to what extent was essential to the earlier judgment, inasmuch as it established liability for Cintron’s injuries.
Dorrance cites to dictum from
Darcy v. Lolohea,
Inasmuch as the four prongs of the collateral estoppel test have been satisfied, we hold that collateral estoppel precludes the relitigation of the issue, ie., whether and to what extent Lee’s and/or Dorrance’s negligence caused the 1996 accident in the present case.
IV. CONCLUSION
Because the Arbitration Award apportioned the liabilities in the Cintron Action as Dorrance 70%’ negligent and Lee 30% negligent and, given our holding that the Arbitration Award has collateral estoppel effect, HRS § 663-31(a) (1993)
3
bars any recovery by Dorrance herein. Accordingly, we con-
elude
Notes
. Hawai'i Revised Statutes (HRS) § 601-20 (1993) states in pertinent part:
Court annexed arbitration program, (a) There is established within the judiciary a court annexed arbitration program which shall be a mandatory and nonbinding arbitration program to provide for a procedure to obtain prompt and equitable resolution of certain civil actions in tort through arbitration. The supreme court shall adopt rules for the implementation and administration of the program by January 1, 1987.
(b) All civil actions in tort, having a probable jury award value, not reduced by the issue of liability, exclusive of interest and costs, of $150,000 or less, shall be submitted to the program and be subject to determination of arbitrability and to arbitration under the rules governing the program. The rules shall include a procedure to classify and establish the order of priority according to which the actions will be processed for the determination of arbitrability and for the arbitration under the program. The court may, at its discretion, remove any action from the program.
. Section 1141.23 provides:
The arbitration award shall be in writing, signed by the arbitrator and filed in the court in which the action is pending. If there is no request for a de novo trial and the award is not vacated, the award shall be entered in the judgment book in the amount of the award. Such award shall have the same force and effect as a judgment in any civil action or proceeding, except that it is not subject to appeal and it may not be attacked or set aside except as provided by Section 473 [(providing relief from a judgment due to mistake, surprise, etc.) ], 1286.2 [ (providing grounds for vacation of an arbitration award based on corruption, fraud, etc.) ], or Judicial Council rule.
State Farm, 259 Cal.Rptr. at 51 (emphasis added). We note that neither sections 473 or 1286.2 nor any Judicial Council rule were implicated in State Farm.
. HRS § 663-31(a) provides in relevant part:
(a) Contributory negligence shall not bar recovery in any action by any person or the person’s legal representative to recover damages for negligence resulting in death or in injury to person or property, if such negligence was not greater than the negligence of the person or in the case of more than one person, the aggregate negligence of such persons against whom recovery is sought, but any damages allowed shall be diminished in proportion to the amount of negligence attributable to the person for whose injury, damage or death recovery is made.
(Emphases added.)
