Case Title: EKLUND v. FARMERS INSURANCE EXCHANGE

Citation: 

Docket Number: 02-278

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-03-17T00:00:00Z

Document:
EKLUND v. FARMERS INSURANCE EXCHANGE2004 WY 2486 P.3d 259Case Number: 02-278, 02-279Decided: 03/17/2004
October 
Term, A.D. 2003

 
 

RANDY 
EKLUND,

 

Appellant(Plaintiff),

 

v.

 

FARMERS 
INSURANCE EXCHANGE,

 

Appellee

(Defendant 
in Intervention).

 

FARMERS 
INSURANCE EXCHANGE,

 

Appellant(Defendant 
in Intervention),

 

v.

 

RANDY 
EKLUND,

 

Appellee(Plaintiff).

 

Appeal 
from the District Court of Fremont County

The 
Honorable Nancy J. Guthrie, Judge

 

Representing 
Appellant Eklund:

Les 
Bowron and Frank R. Chapman of Beech Street Law Office, Casper, WY.  Argument by Mr. 
Bowron.

 

Representing 
Appellee Farmers Ins. Exch.:

James 
D. Bramer and Blair J. Trautwein of Wick, Campbell, Bramer, Ukasick & 
Trautwein, LLC, Fort Collins, CO.  
Argument by Mr. Trautwein.

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

 

LEHMAN, 
Justice.

 

[¶1]      Farmers 
Insurance Exchange (Farmers), which is potentially liable to Randy Eklund 
(Eklund) under an underinsured motorist insurance policy, appeals the district 
court's denial of its motion for trial setting.  The district court denied the motion 
finding that the issue of damages was res judicata due to a prior settlement 
between Eklund and the tortfeasor, Terry Tebben (Tebben), of which Farmers was 
aware.  In the same order denying 
trial setting, the district court also determined that Gainsco Ins. Co. v. 
Amoco Prod. Co., 2002 WY 122, 53 P.3d 1051 (Wyo. 2002) applied and ordered 
that Farmers could only be held liable for its policy limits based on its 
determination that the settlement between Eklund and Tebben was objectively 
unreasonable.  Eklund challenges 
this determination.  We 
reverse.

 

 

 

[¶2]      Farmers advances 
the following issue on appeal:

 

Did 
the trial court err in denying defendant Farmers Insurance Exchange's motion for 
a trial setting and in finding against Farmers on its underinsured motorist 
coverage for policy limits?

 

Eklund 
appeals the following issues:

 

1.  The 
District Court erred as a matter of law by applying Gainsco Ins. Co. v. Amoco 
Prod. Co., 2002 WY 122, 53 P.3d 1051 (Wyo. 2002) to the facts of this 
personal injury case.

 

2.  The 
District Court committed clear error when it purported to make findings of fact 
concerning the settlement, "policy limits," and the reasonableness of the 
settlement.  This error may be 
reversed under the de novo standard of review.

 

 

 

[¶3]      This cases arises 
out of the same accident that was the subject of suit in Eklund v. PRI 
Envtl., Inc., 2001 WY 55, 25 P.3d 511 (Wyo. 2001).  That case thoroughly set forth the facts 
relating to the accident and the circumstances surrounding it, and we need not 
repeat those facts in their entirety.  
Instead, we will relate several of those foundational facts so as to put 
this case in context and disclose additional facts pertinent to the instant 
case.  See PRI 
Environmental, ¶¶3-9.

 

[¶4]      
Tebben was employed by PRI Environmental, Inc (PRI).  On several occasions he was required to 
purchase parts in Casper, Wyoming and deliver them to PRI's worksite.  At the close of the workday on Friday, 
October 21, 1994, Tebben picked up a list of parts needed the following 
Monday.  Tebben was instructed to 
purchase the parts on Monday morning before reporting back to work.  After picking up the list, Tebben left 
for his home in Casper.  Traveling 
ahead of Tebben on a dirt road were fellow PRI employees, Eklund and Warren Ash 
(Ash) in Ash's vehicle.  At some 
point, Ash stopped on the road apparently to determine whether Tebben would take 
a shortcut or continue along the road. Tebben collided with the Ash vehicle 
causing physical injury to all three.  

 

[¶5]      
Eklund filed an action against Tebben and PRI.  Eklund claimed Tebben was negligent in 
driving his vehicle and that PRI was liable for his damages under the theory of 
respondeat superior.  Farmers, which 
provided the underinsured motorist coverage on Ash's automobile, intervened as a 
defendant in the action on June 30, 1999.  
Farmers claimed that if Eklund were unable to fully recover his damages 
from Tebben and PRI, Farmers was potentially responsible to pay damages.  Farmers participated at the pretrial 
conference and filed a pretrial conference memorandum as an additional 
defendant.  In a later filed 
stipulation, the parties agreed that Farmers would not be identified as a party 
defendant to the jury and not appear at trial in front of the jury, but would be 
allowed to interact with both attorneys and the court outside the presence of 
the jury. 
 

[¶6]      PRI filed a 
motion for summary judgment.  PRI 
claimed that Tebben was on his way home at the time of the accident, so no 
genuine issue of material fact existed concerning whether Tebben was acting in 
the scope of his employment at the time of the accident.  On November 23, 1999, the district court 
granted PRI's motion on the basis that, at the time of the accident, Tebben was 
simply leaving the jobsite after work and did not have to return with the parts 
until Monday morning.  Therefore, 
the court concluded that the only reasonable inference that could be drawn from 
the facts was that Tebben was not acting in the scope of his employment when the 
accident happened.  See 
PRI Environmental, ¶¶3-9. 

 

[¶7]      The remaining 
parties were set for trial on December 6, 1999; but, on the day that trial was 
to begin, Eklund and Tebben agreed to a settlement.  This settlement included a stipulated 
judgment against Tebben for the sum of seven hundred fifty thousand 
dollars.  In relevant part, the 
settlement was explained to the court as follows:

 

            
MR. BOWRON: . . . The parties Eklund and Tebben have arrived at 
a settlement of this matter which involves the following terms and 
conditions:

 

            
Mr. Tebben will allow judgment to be taken against him in favor of Mr. 
Eklund for the sum of $750,000.

 

            
The judgment by this agreementand we'll have a stipulation prepared and 
entered into between the partieswill set forth that Mr. Eklund, in exchange for 
that judgment for the sum of $750,000, Mr. Eklund covenants not to execute 
against Mr. Tebben personally in terms of his personal assets, and that includes 
that Mr. Tebben will not provide Mr. Eklund with an assignment of any claim or 
claims that he may have against his own insurance company, Mountain West Farm 
Bureau.

 

            
Mr. Eklund preserves and reserves his right to appeal the Court's 
granting of summary judgment in favor of PRI on the issue of whether or not Mr. 
Tebben was within the scope of his employment at the time of the accident, and 
that issue necessarily incorporates the concept that PRI, by virtue of the 
doctrine of respondeat superior, is liable for Mr. Eklund's injuries as the 
employer of Terry Tebben.

 

            
And if Mr. Bramer wants to make a record of it, he may.  But I believe that although they are an 
observer to this case, this agreement does not do anything to inhibit Farmers 
Insurance Exchange from also appealing, as a party defendant, the Court's 
granting of summary judgment in favor of PRI Environmental, Inc., as Mr. 
Tebben's employer.

 

. . .

 

            
If I have left anything out or if either of the attorneys wish to add 
anything, I should mention that Mr. Bramer, who represents Farmers Insurance 
Exchange, and I have discussed the underinsured motorist provisions to which Mr. 
Eklund is a party beneficiary, and that the rights under that policy of 
insurance remain.

 

            
The parties are free to agree or disagree as to the amount of damages, 
and they may or may not agree to arbitrate any claim Mr. Eklund may have or does 
have against Farmers Insurance Exchange.  
And I believe that's all I have.

 

            
MR. BRAMER:  This is James 
Bramer appearing on behalf of Farmers Insurance Exchange.  As Mr. Bowron has stated, I would just 
restate that Farmers Insurance Exchange reserves all rights to appeals related 
to pre-jury issues, and also reserves all contract rights that may come from an 
insurance policy written to Mr. Warren Ash for which the plaintiff Randy Eklund 
has beneficiary rights as an additional insurer.  That's all I have.

 

. . .

 

            
MR. BRAMER:  I should also 
add one more point on behalf of Farmers Insurance Exchange:  It's to be clear that this agreement did 
not have the participation of Farmers Insurance Exchange.  It is an agreement between the 
plaintiff, Randy Eklund, and the defendant, Terry Tebben, 
only.

 

            
MR. BOWRON:  And I have to 
make sure that I make it clear, however, that Mr. Bramer, on behalf of Farmers 
Insurance Exchange, was informed of and advised of the contents of this 
settlement at all times, well prior to this agreement being put on record.  

 

[¶8]      At that point, 
court adjourned and no trial took place.  
Thereafter, the various parties appealed the summary judgment granted to 
PRI, and this court affirmed that summary judgment.  See PRI Environmental, 
¶¶22-23.  Having previously never 
done so, on June 6, 2002, Eklund filed a motion for entry of judgment against 
Tebben in accordance with the stipulated agreement.  On June 28, 2002, Farmers filed a motion 
for trial setting.   Following 
these motions, but before the court ruled on these motions, on October 7, 2002, 
Eklund filed a separate action against Farmers in the Eighth Judicial District 
of Wyoming.  In this action Eklund 
sought a declaratory judgment that Farmers waived its right to a jury trial on 
the issue of Eklund's damages and is estopped from seeking re-litigation of all 
issues related to those damages.  
Eklund additionally sought damages for alleged bad faith, policy 
benefits, and attorney fees pursuant to Wyo. Stat. Ann. § 26-15-124. 

 

[¶9]      On November 5, 
2002, the trial court denied Farmers' motion for trial setting and entered an 
order against Farmers.  The district 
court found that the doctrine of res judicata barred Farmers from disputing 
damages.  In its order the district 
court found "Farmers had an opportunity to present their claim to a jury.  Farmers chose to forgo its right to a 
jury determination of damages when it failed to prosecute its case in front of a 
jury when it had the opportunity to do so."  The order also stated that in light of 
Gainsco Ins. Co. v. Amoco Prod. Co., 2002 WY 122, 53 P.3d 1051 (Wyo. 
2002), the amount of the settlement between Eklund and Tebben was objectively 
unreasonable and therefore found that Farmers could only be held liable for its 
policy limits.  Eklund then filed a 
motion to amend the order considering the district court's reference to the 
Gainsco case.  This motion 
was denied, and these appeals followed.

 

 

STANDARD 
OF REVIEW

 

[¶10]   The issues asserted by the parties 
present questions of law.  We review 
questions of law de novo.  We accord 
no deference to the district court concerning questions of law and are not bound 
by the district court's determinations concerning legal issues.  Aztec Gas & Oil Corp. v. Roemer 
Oil Co., 948 P.2d 902, 903 (Wyo. 1997); see also State Farm Mut. 
Auto. Ins. Co. v. Shrader, 882 P.2d 813, 820 (Wyo. 1994). 

 

 

DISCUSSION

 

[¶11]   We begin with the issue of whether 
Farmers is precluded from litigating the issue of damages.  Farmers asserts that the district court 
erred when it found the doctrine of res judicata applied to prevent Farmers from 
seeking a determination of its obligation to Eklund.  Eklund claims that the district court 
did not err, but should this court find that the doctrine of res judicata does 
not apply, the doctrines of waiver and estoppel by acquiescence also apply.  Thus, Eklund argues that the district 
court's denial of Farmers' motion for trial setting should be upheld.  We disagree that any of these doctrines 
apply to the case at hand and reverse.  

 

[¶12]   Farmers intervened in this action 
as a defendant.  As such, Farmers 
became a party to the litigation with the same rights and responsibilities of an 
original party to the litigation.  
In its answer to the underlying complaint, Farmers asserted several 
affirmative defenses including the operation of the insurance policy at issue, 
comparative fault on behalf of the plaintiff, pre-existing injuries and/or 
conditions, assumption of risk, and the failure to mitigate damages.  Farmers claims that while it clearly 
asserted these affirmative defenses, such issues were never litigated and 
resolved and that Farmers continues to have an interest in litigating the 
claim.  We agree.  Farmers was never dismissed as a 
defendant in intervention and did not participate in the settlement between 
Eklund and Tebben.  Hence, Farmers 
has a right to have its obligation, if any, to Eklund determined.  

 

[¶13]   As we have stated numerous times 
"[r]es judicata bars the relitigation of previously litigated claims or causes 
of action.  Slavens v. Board of 
County Commissioners, 854 P.2d 683, 686 (Wyo. 1993)."  Polo Ranch Co. v. City of Cheyenne, 
2003 WY 15, ¶12, 61 P.3d 1255, ¶12 (Wyo. 2003) (quoting PRI 
Environmental, ¶15).  The four 
factors used to determine whether res judicata applies are 1) identity in 
parties; 2) identity in subject matter; 3) the issues are the same and relate to 
the subject matter; and 4) the capacities of the persons are identical in 
reference to both the subject matter and the issues between them.  Id.  Res judicata generally prevents 
parties from presenting the same claim in subsequent actions once that claim has 
been adjudicated. PRI Environmental, ¶18.  "A policy reason for res judicata is 
that each litigant shall be limited to one opportunity to try his case on the 
merits."  Goglio v. Star Valley 
Ranch Ass'n, 2002 WY 94, ¶14, 48 P.3d 1072, ¶14 (Wyo. 2002).  Additionally, res judicata encourages 
resolution of the plaintiff's claims in a single action.  PRI Environmental, at ¶19.  It is worth noting that this case does 
not present a subsequent lawsuit; it is in fact the same lawsuit.  

 

[¶14]   Farmers claims that the issue of 
damages was never litigated and therefore there is not relitigation.  Eklund counters that consent judgments 
are the equivalent of a litigated claim.  
We have said that we consider consent judgments and dismissals with 
prejudice to be the equivalent of a judgment on the merits for the purposes of 
res judicata. PRI Environmental, ¶17.  One reason for doing so is to force 
parties to abide by their agreements.  
PRI Environmental, ¶19.  

 

[¶15]   Nevertheless, the settlement 
presented by this case is not an agreement between Eklund and Farmers.  Instead, the settlement was between 
Eklund and Tebben.  While Farmers 
had knowledge of the settlement, it was not a party to the settlement and did 
not consent to the settlement in that sense.  Due to the nature of underinsured 
motorist coverage, Farmers' liability does depend to some extent on Tebben's 
liability.  It therefore may appear 
that Farmers is bound by the amount of judgment against Tebben whether that 
amount is determined by settlement or jury trial.  However, in this instance, Farmers 
intervened to protect its interests and prevent this very result.  In doing so, Farmers became a party with 
its own interest in a jury determination of damages.  Farmers' intervention made it clear that 
Farmers had no intent to be bound by any settlement between Eklund and Tebben if 
it was not a party to such settlement.  

 

[¶16]   Eklund argues that Farmers allowed 
the settlement to take place, thus Farmers consented to it.  Farmers was not in a position to prevent 
a settlement between Eklund and Tebben.  
Having no control over Eklund and Tebben, but having intervened as a 
party, Farmers' course of action was to prevent being bound to that settlement 
by making it clear that Farmers was not a party to the settlement and did not 
consent to it.  Looking to the 
recitation of the settlement agreement, we can see that this is precisely what 
Farmers did.   For instance, we 
see: 

 

            
If I have left anything out or if either of the attorneys wish to add 
anything, I should mention that Mr. Bramer, who represents Farmers Insurance 
Exchange, and I have discussed the underinsured motorist provisions to which Mr. 
Eklund is a party beneficiary, and that the rights under that policy of 
insurance remain.

 

            
The parties are free to agree or disagree as to the amount of damages, 
and they may or may not agree to arbitrate any claim Mr. Eklund may have or does 
have against Farmers Insurance Exchange.  
And I believe that's all I have.

 

            
MR. BRAMER:  This is James 
Bramer appearing on behalf of Farmers Insurance Exchange.  As Mr. Bowron has stated, I would just 
restate that Farmers Insurance Exchange reserves all rights to appeals related 
to pre-jury issues, and also reserves all contract rights that may come from an 
insurance policy written to Mr. Warren Ash for which the plaintiff Randy Eklund 
has beneficiary rights as an additional insurer.  That's all I have.

 

. . .

 

            
MR. BRAMER:  I should also 
add one more point on behalf of Farmers Insurance Exchange: It's to be clear 
that this agreement did not have the participation of Farmers Insurance 
Exchange.  It is an agreement 
between the plaintiff, Randy Eklund, and the defendant, Terry Tebben, 
only.

 

[¶17]   These excerpts show that Farmers 
clearly had the impression that it was not bound by the settlement.  They also show that the agreement did 
not dispose of all the claims.  In 
fact, the passages show that some later contestation was specifically 
contemplated because "the parties [were] free to agree or disagree as to the 
amount of damages."  It would be 
patently unfair to bind a party to a settlement to which it did not participate 
and clearly thought it had reserved its right not to be bound to.  If the recitation of the agreement shows 
anything besides the settlement terms between Eklund and Tebben, it is that at 
the time of settlement both Eklund and Farmers reserved all rights with respect 
to each other including the right to determine damages and Farmers' liability 
under the underinsured motorist policy.  

 

[¶18]   Furthermore, it is important to 
note that Farmers intervened and became a party.  Generally, a determination of the 
liability of one party in multiparty litigation is not a determination of 
liability to all parties.  
See Local Number 93, Int'l Ass'n of Firefighters, AFL-CIO 
C.L.C. v. Cleveland, 478 U.S. 501, 529, 106 S. Ct. 3063, 3079, 92 L. Ed. 2d 405 
(1986).  See also W.R.C.P. 
54(b) and Hoback Ranches, Inc. v. Urroz, 622 P.2d 948, 949 (Wyo. 
1981).   In multiparty 
litigation, parties who choose to resolve the matter by settling cannot affect 
the rights of those who were dissenting parties.  The settling parties may not dispose of 
the third party's claim without that party's agreement.  See Firefighters, 478 U.S.  at 
529, 106 S. Ct.  at 3079.  Farmers 
intervened early to protect its rights stating that under American Family 
Ins. Co. v. Bowen, 959 P.2d 1199 (Wyo. 1998), it was required to do so or 
risk having its motion declared untimely.  
Looking to Farmers' answer, we can surmise that it was Farmers' intent to 
have its obligations under the underinsured motorist policy determined through 
litigation and to prevent itself from being bound to a settlement to which it 
was not a party.   It would be 
somewhat contradictory to now say that even though Farmers intervened, a 
settlement among the other parties, in which Farmers did not participate, will 
still bind Farmers.  

 

[¶19]   The district court seemed to 
recognize the problem that damages between Eklund and Farmers were not actually 
litigated and, citing Hamill v. State, 948 P.2d 1356, 1358-59 (Wyo. 
1997), stated:  "The doctrine of res 
judicata is not limited to only those issues which were actually decided in an 
earlier proceeding.  Issues which 
could have been raised in an earlier proceeding may also be foreclosed 
from subsequent consideration."  The 
district court then stated:  
"Farmers had an opportunity to present their [sic] claim to a jury.  Farmers chose to forgo its right to a 
jury determination of damages when it failed to prosecute its case in front of a 
jury when it had the opportunity to do so."  

 

[¶20]   The district court is correct that 
this is a recognized principle of the doctrine of res judicata.  However, the party being barred by res 
judicata must have truly been given an opportunity to raise that issue in an 
earlier proceeding.  We must, 
therefore, consider the context of Farmers' participation in this 
litigation.  Farmers did not carry 
the burden of establishing damages.  
Farmers intervened as a defendant and asserted affirmative defenses to 
some of the damages claimed by Eklund.  
The burden of proving the amount of damages was Eklund's.  He was the plaintiff in the action and 
was the party claiming damages.  In 
fact, Eklund technically had no claim against Farmers until we upheld the 
summary judgment granted to PRI because PRI had a $1,000,000 liability policy 
that would have covered Eklund's claimed injuries.  Had PRI's summary judgment been 
overturned, a trial between Eklund and Farmers would have been unnecessary.  

 

[¶21]   In addition, adding a twist to 
these particular circumstances is the fact that the parties made an agreement 
concerning Farmers' participation in the trial.  This agreement included that Farmers 
would 

 

cease 
all further trial preparation efforts, including preparation of witnesses, 
exhibits and substantive strategy communication with Tebben and/or Tebben's 
counsel, and will not appear at trial in the capacity of a party at trial in 
exchange for Plaintiff's agreement not to identify Farmers Insurance Exchange 
[as a] party defendant to the jury, Plaintiff's agreement not to divulge the 
existence of any insurance fund available to indemnify Defendant Tebben's 
actions at trial, and to curtail any insurance reference before the jury as 
generally proscribed by Rule 411, Wyoming Rules of Evidence.  

 

Consequently, 
Farmers attended to proceedings on December 6 with the expectation that, for the 
most part, it would be an observer and that Tebben and his attorney would be 
presenting the defense.  Under these 
circumstances expecting Farmers to demand a trial at that date would be somewhat 
unrealistic.

 

[¶22]   Furthermore, the principle cited by 
the district court from Hamill is followed by, "Thus, unless Hamill can 
show good cause why the issue was not raised at an earlier opportunity, or that 
the interests of justice require consideration of his claim, the court may 
refuse to consider the issue in a later proceeding."  Hamill, at 1359.  We have therefore recognized that some 
circumstances may be argued to prevent the application of this rule.  In fact we have noted such exceptions to 
the doctrine of res judicata because one of the goals of res judicata is to 
give, rather than deny, justice.  
Cermak v. Great West Cas. Co. 2 P.3d 1047, 1054 (Wyo. 2000).  Here, even if Farmers could be 
considered to have had the opportunity to present its claim, Farmers has a good 
cause reason for why it did not present its claim earlier.  We therefore hold that res judicata does 
not apply to bar the litigation of the issues between Eklund and Farmers.  

 

[¶23]   Eklund argues that if res judicata 
does not apply, then waiver or estoppel by acquiescence applies.  We have previously found that if parties 
acquiesce in the decree of a district court, the decree is res judicata as to 
them.  In Re Estate of 
Kokesh, 360 P.2d 368, 371 (Wyo. 1961).  
When Eklund moved the district court to reduce the settlement to 
judgment, Farmers responded and asserted that it had reserved all rights and was 
of the position that it was not bound by that settlement.  Prior to that time no judgment on the 
settlement had been entered.  Hence, 
Farmers did not acquiesce in the judgment.  
Additionally, waiver is the intentional relinquishment of a known right 
and must be manifest in some unequivocal manner.  State ex rel. Workers' Safety & 
Compensation Div. v. Wright, 983 P.2d 1227, 1231 (Wyo. 1999).  It is clear from the recitation of the 
settlement that Farmers clearly believed it had the right to a later 
determination of damages and tried to preserve that right.  Farmers thus did not intentionally 
relinquish its right to a determination of damages.  

 

[¶24]   Farmers similarly had no prior 
opportunity to appeal this issue.  A 
final adjudication of this issue did not occur until November 5, 2002, when the 
trial court denied Farmers' motion for trial setting and found Farmers liable to 
Eklund for its policy limits.  The 
only party with a judgment prior to that point was PRI, and at the time of the 
first appeal the summary judgment granted to PRI was the only appealable 
issue.  We therefore hold that these 
other preclusion doctrines do not apply to bar Farmers from litigating the issue 
of damages.  It is clear that 
Farmers was not a party to the settlement and reserved its right to contest 
damages at a later date.  
Accordingly, we find that the district court erred in denying Farmers' 
motion for trial setting.

 

[¶25]   Given that we reverse on the first 
issue, we need not address Eklund's arguments with respect to whether or not the 
district court erred in applying Gainsco to this case.  The parties are entitled to a 
determination of the issue of damages between them and are not bound by the 
settlement between Eklund and Tebben.  
As a result, we need not determine at this time whether or not Gainsco 
applies to this situation or situations similar to this.  Whether or not the settlement between 
Eklund and Tebben was reasonable is not relevant to the issues remaining between 
Eklund and Farmers.    

 

 

CONCLUSION

 

[¶26]   We reverse the order of the 
district court denying Farmers' motion for trial setting and remand the matter 
to the district court for a trial on the issue of damages.