Title: FRANK MONAT V STATE FARM INS CO

State: michigan

Issuer: Michigan Supreme Court

Document:

_______________________________ 
 
 
 
 
 
 
 
 
Michigan Supreme Court  
Lansing, Michigan 48909  
Chief Justice 
Justices 
Maura D. Corrigan 
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED APRIL 22, 2004 
FRANK MONAT, 
Plaintiff-Appellee, 
v 
No. 121122 
STATE FARM INSURANCE COMPANY, 
Defendant-Appellant. 
BEFORE THE ENTIRE BENCH 
MARKMAN, J.  
We granted leave to appeal in this case to examine the 
mutuality 
requirement 
of 
the 
doctrine 
of 
collateral 
estoppel. 
In this first-party, no-fault action, defendant 
seeks to invoke collateral estoppel to preclude plaintiff 
from relitigating an issue already decided in plaintiff’s 
third-party negligence action. 
Due only to a lack of 
mutuality, the Court of Appeals, in a split decision, 
affirmed the trial court’s denial of defendant’s motion for 
summary disposition. 
We hold that, where collateral 
estoppel is being asserted defensively against a party who 
 
 
 
 
 
 
has already had a full and fair opportunity to litigate the 
issue, mutuality is not required. 
Further, because we 
believe that this test has been satisfied, we reverse the 
decision of the Court of Appeals, remand this case to the 
trial court, and order that court to grant defendant’s 
motion for summary disposition. 
I. BACKGROUND 
While stopped at a traffic light, plaintiff’s vehicle 
was rear-ended by another vehicle. 
Plaintiff claims to 
have suffered serious injuries as a result of this 
accident. 
Defendant, plaintiff’s no-fault insurer, paid 
personal injury protection (PIP) benefits, but stopped 
paying such benefits shortly after plaintiff filed a third­
party negligence action against the driver of the other 
vehicle. 
Plaintiff then filed this first-party action 
against defendant for PIP benefits. 
The third-party action proceeded to trial, where, 
prior to trial, both parties entered into an agreement to 
forgo their opportunity to appeal in lieu of plaintiff 
agreeing to place a cap on damages and defendant agreeing 
to pay plaintiff an undisclosed sum of damages regardless 
of the jury’s verdict. 
That trial ended with a “no cause 
of action” verdict after the jury specifically found 
plaintiff not to have been injured. 
Following this 
verdict, defendant moved for summary disposition in the 
2  
 
 
 
 
 
 
 
                                                 
first-party action. 
Defendant asserted that the doctrine 
of collateral estoppel precluded plaintiff’s first-party 
claim because plaintiff litigated and lost the issue of 
injury in the third-party action. 
The trial court denied 
defendant’s motion. 
The Court of Appeals, in a split opinion, affirmed the 
trial court’s decision.1
 The majority concluded that the 
doctrine of collateral estoppel could not apply because 
mutuality of estoppel was absent. 
The dissenting judge, 
however, opined that the mutuality requirement should be 
relaxed in cases such as this and, thus, would have applied 
the doctrine of collateral estoppel. 
II. STANDARD OF REVIEW 
A trial court’s decision to grant or deny a motion for 
summary disposition is reviewed de novo. 
Stanton v Battle 
Creek, 466 Mich 611, 614; 647 NW2d 508 (2002). 
III. ANALYSIS 
Under the no-fault act, defendant is obligated to pay 
plaintiff benefits for “bodily injury arising out of the 
ownership, operation, maintenance or use of a motor vehicle 
. . . .” 
MCL 500.3105(1). 
Defendant asserts that the 
doctrine of collateral estoppel applies, and thus it is not 
1 Unpublished opinion per curiam, issued February 15,
2002 (Docket No. 222690). 
3 
 
 
 
                                                 
 
 
 
liable to pay plaintiff PIP benefits because plaintiff was 
found not to have been injured in the third-party action. 
Generally, for collateral estoppel to apply three 
elements must be satisfied: (1) “a question of fact 
essential to the judgment must have been actually litigated 
and determined by a valid and final judgment”; (2) “the 
same parties must have had a full [and fair] opportunity to 
litigate the issue”;2 and (3) “there must be mutuality of 
2 In determining whether a party has had a “full and
fair” opportunity to litigate an issue, courts should look
to the factors set forth in 1 Restatement Judgments, 2d, ch
3, Former Adjudication, §§ 28-29. 
Section 28, p 273,
provides: 
Although an issue is actually litigated and
determined by a valid and final judgment, and the
determination 
is 
essential 
to 
the 
judgment,
relitigation of the issue in a subsequent action
between the parties is not precluded in the 
following circumstances: 
(1) The party against whom preclusion is
sought could not, as a matter of law, have 
obtained review of the judgment in the initial 
action; or 
(2) The issue is one of law and (a) the two
actions involve claims that are substantially
unrelated, 
or 
(b) 
a 
new 
determination 
is 
warranted 
in 
order 
to 
take 
account 
of 
an 
intervening 
change 
in 
the 
applicable 
legal
context 
or 
otherwise 
to 
avoid 
inequitable
administration of the laws; or 
(3) A new determination of the issue is 
warranted by differences in the quality or 
extensiveness of the procedures followed in the
two 
courts 
or 
by 
factors 
relating 
to 
the 
allocation of jurisdiction between them; or 
(4) The party against whom preclusion is
sought had a significantly heavier burden of 
4 
 
 
 
                                                                                                                                                 
 
 
persuasion with respect to the issue in the 
initial action than in the subsequent action; the
burden has shifted to his adversary; or the 
adversary has a significantly heavier burden than
he had in the first action; or 
(5) There is a clear and convincing need for
a new determination of the issue (a) because of
the potential adverse impact of the determination
on the public interest or the interests of 
persons not themselves parties in the initial
action, (b) because it was not sufficiently
foreseeable at the time of the initial action 
that the issue would arise in the context of a 
subsequent action, or (c) because the party
sought to be precluded, as a result of the 
conduct 
of 
his 
adversary 
or 
other 
special
circumstances, 
did 
not 
have 
an 
adequate
opportunity or incentive to obtain a full and
fair adjudication in the initial action. 
Section 29, p 291, provides: 
A party precluded from relitigating an issue
with an opposing party . . . is also precluded
from doing so with another person unless the fact
that he lacked a full and fair opportunity to
litigate the issue in the first action or other
circumstances 
justify 
affording 
him 
an 
opportunity 
to 
relitigate 
the 
issue. 
The 
circumstances to which considerations should be 
given include those enumerated in § 28 and also
whether: 
(1) 
Treating 
the 
issue 
as 
conclusively
determined 
would 
be 
incompatible 
with 
an 
applicable scheme of administering the remedies
in the actions involved; 
(2) The forum in the second action affords 
the party against whom preclusion is asserted
procedural opportunities in the presentation and
determination 
of 
the 
issue 
that 
were 
not 
available in the first action and could likely 
result in the issue being differently determined; 
(3) The person seeking to invoke favorable
preclusion, or to avoid unfavorable preclusion,
could have effected joinder in the first action
between himself and his present adversary;
5 
 
 
                                                                                                                                                 
estoppel.” 
Storey v Meijer, Inc, 431 Mich 368, 373 n 3; 
429 NW2d 169 (1988). 
“[M]utuality of estoppel requires 
that in order for a party to estop an adversary from 
relitigating an issue that party must have been a party, or 
in privy to a party, in the previous action. 
In other 
words, ‘[t]he estoppel is mutual if the one taking 
(4) 
The 
determination 
relied 
on 
as 
preclusive was itself inconsistent with another
determination of the same issue; 
(5) The prior determination may have been
affected by relationships among the parties to
the first action that are not present in the
subsequent action, or apparently was based on a
compromise verdict or finding; 
(6) 
Treating 
the 
issue 
as 
conclusively
determined may complicate determination of issues
in 
the 
subsequent 
action 
or 
prejudice 
the 
interest of another party thereto; 
(7) The issue is one of law and treating it
as conclusively determined would inappropriately
foreclose 
opportunity 
for 
obtaining
reconsideration of the legal rule upon which it
was based; 
(8) Other compelling circumstances make it
appropriate that the party be permitted to 
relitigate the issue. 
We note further that the United States Supreme Court
has observed in this regard as follows:
Determining whether a [party] has had a full
and fair chance to litigate [an issue] in an
earlier case is of necessity not a simple matter
[because] . . . as so often is the case, no one
set of facts, no one collection of words or
phrases, will provide an automatic formula for
proper rulings on estoppel pleas. 
In the end,
[the] decision will necessarily rest on the trial
courts’ sense of justice and equity. 
[Blonder-
Tongue Laboratories, Inc v Univ of Illinois 
Foundation, 402 US 313, 333-334; 91 S Ct 1434; 2
L Ed 2d 788 (1971).] 
6  
 
 
 
advantage of the earlier adjudication would have been bound 
by it, had it gone against him.’” 
Lichon v American 
Universal Ins Co, 435 Mich 408, 427; 459 NW2d 288 (1990), 
quoting Howell v Vito’s Trucking & Excavating Co, 386 Mich 
37, 43; 191 NW2d 313 (1971). 
Plaintiff has had a full and fair opportunity to 
litigate the issue concerning his alleged injury. 
The 
general rule permits relitigation when “[t]he party against 
whom preclusion is sought could not, as a matter of law, 
have obtained review of the judgment in the initial action 
. . . .” 
Restatement § 28(1)(emphasis added). 
Here, 
however, plaintiff voluntarily surrendered his opportunity 
for appellate review, to which he had been entitled as a 
matter of law. 
See, e.g., Greenleaf v Garlock, Inc, 174 
F3d 352, 359 (CA 3, 1999). 
Plaintiff, who has been 
represented by counsel throughout the entire litigation 
process, agreed prior to trial of the third-party action to 
forgo his opportunity for appeal the jury’s verdict in lieu 
of the third-party defendant agreeing to pay plaintiff an 
undisclosed sum of damages regardless of such verdict. 
This is, we believe, properly understood as a waiver of any 
appeal. 
While the “full and fair opportunity to litigate” 
normally encompasses the opportunity to both litigate and 
appeal, 
plaintiff 
here 
voluntarily 
relinquished 
the 
opportunity 
to 
pursue 
an 
appeal 
in 
return 
for 
7  
 
 
 
  
   
                                                 
consideration—the guaranteed receipt of a minimal sum of 
damages regardless of the jury’s verdict. 
Further, 
plaintiff’s decision to forgo any appeal was a wise 
tactical decision because, as a result of this agreement, 
plaintiff received an undisclosed sum of damages even 
though the jury concluded that he had suffered no injury.3 
While this agreement guaranteed that plaintiff would 
receive such damages regardless of the jury’s verdict, 
there remained nonetheless the possibility that the jury 
might have awarded a greater award. 
This possibility 
afforded sufficient incentive for plaintiff’s vigorous 
advocacy regarding the injury question in the initial 
litigation. 
Moreover, to describe this type of agreement 
as anything other than “full and fair” would be to 
encourage a plaintiff to negotiate away appeals with one 
defendant while keeping in suspense other lawsuits in the 
event that plaintiff’s first lawsuit proves unsuccessful. 
Overlooking, however, the fact that plaintiff has had 
a full and fair opportunity to litigate the injury issue in 
3 In response to plaintiff’s attorney’s assertion that
plaintiff “should not be punished just because he entered
into a settlement to his benefit,” the trial court 
responded that, in light of this agreement, plaintiff “was
the happiest guy on earth when he heard the jury speak. So 
was his lawyer.” 
8 
 
 
 
 
 
                                                 
 
 
this case,4 the dissent accepts plaintiff’s argument that he 
is now entitled to another full and fair opportunity to 
litigate exactly the same issue only because mutuality of 
estoppel does not exist. 
As asserted by the dissent, the 
general rule supports such an argument—collateral estoppel 
precludes relitigation and imposes “‘a state of finality to 
litigation where the same parties have previously had a 
full and fair opportunity to adjudicate their claims.’” 
Post at 2, quoting Nummer v Dep’t of Treasury, 448 Mich 
534, 541; 533 NW2d 250 (1995). 
However, as the dissent acknowledges, there is a 
modern trend among the states to recognize exceptions to 
the mutuality requirement. 
Moreover, contrary to the 
4 Although the dissent fails to identify any reason why
it believes plaintiff here did not have a "full and fair
opportunity" to litigate the injury issue in the prior
case, the dissent nonetheless criticizes the second prong
of the majority’s 
test, stating that any method used to
determine whether a party against whom collateral estoppel
is asserted defensively had a full and fair opportunity to
litigate the issue in a prior case is based on an “‘ad hoc 
formulation 
of 
. 
. 
. 
innumerable 
and 
unmanageable
factors.’” 
Post at 5, quoting Howell, supra at 51. 
While 
we agree that a court must “proceed cautiously” when 
determining whether this prong has been satisfied, 47 Am
Jur 2d, Judgments, § 651, p 60, quoting McCoy v Colonial
Baking Co, Inc, 572 So 2d 850, 854 (Miss, 1990), we do not
believe that the factors set forth in the Restatement are 
“innumerable or unmanageable” as evidenced by the fact that
not only has the dissent failed to identify any reason it 
believes such factors are “innumerable and unmanageable,”
but the numerous courts that have repeatedly applied these
factors 
have 
never 
found 
them 
“innumerable 
and 
unmanageable.” See 47 Am Jur 2d, Judgments, §§ 651-652, pp
59-68. 
9  
 
 
 
  
                                                 
 
 
 
 
 
 
dissent, this Court has not “consistently and explicitly 
declined the invitation to follow the modern trend” of 
abandoning, in part, the mutuality requirement. Post at 4.5 
Rather, 
we 
have 
expressly 
recognized 
that 
“lack 
of 
mutuality does not always preclude the application of 
collateral estoppel. 
There are several well-established 
5 Although the dissent cites Howell for the proposition
that this Court has refused to abandon any part of 
mutuality of estoppel, post at 4-5, this Court in Howell 
only refused to abandon mutuality of estoppel where 
collateral estoppel was asserted offensively. 
Howell, 
supra at 48. 
In fact, it appears that, had this Court in
Howell been presented with the issue raised here regarding
defensive use of collateral estoppel, the Court may well
have abandoned mutuality of estoppel where it is asserted
defensively against a party who has already had a full and
fair opportunity to litigate the issue in a prior suit: 
Although there may be merit to Justice 
Traynor’s observation in Bernhard  [v Bank of 
American Nat’l Trust & Savings Ass’n, 19 Cal 2d
807; 122 P2d 892 (1942)] that the well-recognized
exceptions to the mutuality rule in effect 
produce the same result as unilateral estoppel or
non-mutuality, it should be noted that the 
recognized exceptions are confined to defensive 
pleading of collateral estoppel . . . . This fact
is 
quite 
significant 
in 
determining 
whether 
collateral estoppel should or should not apply .
. . "The courts are more inclined to permit the
defensive, 
than 
the 
offensive, 
use 
of 
the 
doctrine of collateral estoppel.” [Howell, supra
at 47 n 7 (citation omitted).] 
We believe the clear import of Howell is to allow 
defensive collateral estoppel where mutuality does not 
exist. 
Indeed, a reading of Howell makes any other 
conclusion difficult, given that the Court there said that
the 
fact 
of 
whether 
collateral 
estoppel 
is 
pleaded
offensively or defensively “is quite significant.” Id. If 
mutuality were always required, the manner of pleading
collateral estoppel would be of no significance.
10 
 
 
 
   
                                                 
 
exceptions to the mutuality requirement, such as when an 
indemnitor seeks to assert in its defense a judgment in 
favor of its indemnitee, or where a master defends by 
asserting a judgment for a servant.” 
Lichon, supra at 428 
n 16.6 
Although the circumstances of the instant case are 
distinct from those addressed in Lichon, we now expand the 
exceptions to the requirement of mutuality of estoppel to 
encompass these circumstances. 
In our judgment, allowing 
the 
defensive 
use 
of 
collateral 
estoppel 
in 
these 
circumstances would enhance the efficient administration of 
justice and ensure more consistent judicial decisions. 
As early as 1942, the California Supreme Court 
abandoned mutuality of estoppel altogether on the ground 
that “it would be unjust to permit one who has had his day 
in court to reopen identical issues . . . .” 
Bernhard v 
6 Because the Court in Lichon held that “collateral 
estoppel [was] unavailable to [defendant] because the issue
. . . was never actually litigated,” Lichon, supra at 428,
we believe that, whatever we said in Lichon concerning
mutuality, was dictum. 
Further, in accord with our 
analysis of Howell, n 5, what the Court in Lichon said 
concerning mutuality was in error because the Court in
Howell did not generally reaffirm its commitment to 
mutuality. 
11 
 
 
 
 
 
 
 
 
                                                 
   
Bank of America Nat’l Trust & Savings Ass’n, 19 Cal 2d 807, 
813; 122 P2d 892 (1942).7  In Bernhard, the court stated: 
The criteria for determining who may assert
a plea of res judicata differ fundamentally from
the criteria for determining against whom a plea
of 
res 
judicata 
may 
be 
asserted. 
The 
requirements of due process of law forbid the
assertion of a plea of res judicata against a
party 
unless 
he 
was 
bound 
by 
the 
earlier 
litigation in which the matter was decided. 
He 
is bound by that litigation only if he has been a
party thereto or in privity with a party thereto.
There is no compelling reason, however, for 
requiring that the party asserting the plea of 
res judicata must have been a party, or in 
privity with a party, to the earlier litigation.
[Id. at 811-812 (citations omitted).] 
The United States Supreme Court in Blonder-Tongue 
Labs, Inc v Univ of Illinois Foundation, 402 US 313, 323­
324; 91 S Ct 1434; 2 L Ed 2d 788 (1971), relied extensively 
on the Bernhard reasoning in holding that mutuality is not 
required where collateral estoppel is asserted defensively 
and where the plaintiff has already had a full and fair 
opportunity to litigate the issue. The Court stated: 
The courts have often discarded the rule 
while commenting on crowded dockets and long
delays preceding trial. 
Authorities differ on 
whether the public interest in efficient judicial
administration is a sufficient ground in and of
itself for abandoning mutuality, but it is clear
that more than crowded dockets is involved. 
The 
broader question is whether it is any longer
tenable to afford a litigant more than one full 
7 Because this case does not involve the offensive use 
of collateral estoppel, we express no opinion as to whether
Bernhard was correct in its abandonment of mutuality in
both the context of its offensive and defensive use. 
12  
 
 
 
 
 
 
                                                 
and fair opportunity for judicial resolution of
the same issue. 
The question in these terms
includes as part of the calculus the effect on
judicial administration, but it also encompasses
the concern exemplified by Bentham’s reference to
the gaming table in his attack on the principle
of mutuality of estoppel.[8]  In any lawsuit where
a defendant, because of the mutuality principle,
is forced to present a complete defense on the
merits to a claim which the plaintiff has fully
litigated and lost in a prior action, there is an
arguable misallocation of resources. 
To the 
extent the defendant in the second suit may not
win by asserting, without contradiction, that the
plaintiff 
had 
fully 
and 
fairly, 
but 
unsuccessfully, litigated the same claim in a
prior suit, the defendant’s time and money are 
diverted 
from 
alternative 
uses—productive 
or 
otherwise—to relitigation of a decided issue. 
And, still assuming that the issue was resolved
correctly in the first suit, there is reason to
be concerned about the plaintiff’s allocation of
resources. Permitting repeated litigation of the
same issue as long as the supply of unrelated
defendants holds out reflects either the aura of 
the gaming table or “a lack of discipline and of
disinterestedness on the part of the lower 
courts, hardly a worthy and wise basis for 
fashioning rules of procedure.” Although neither
judges, the parties, nor the adversary system
performs perfectly in all cases, the requirement
of determining whether the party against whom an
estoppel 
is 
asserted 
had 
a 
full 
and 
fair 
opportunity to litigate is a most significant
safeguard. [Id. at 328-329 (citation omitted).] 
In this state, the Court of Appeals has expressly 
stated that defensive use of collateral estoppel does not 
require mutuality. 
In Knoblauch v Kenyon, 163 Mich App 
8 Philosopher Jeremy Bentham had attacked mutuality of
estoppel “as destitute of any semblance of reason, and as
‘a maxim which one would suppose to have found its way from
the gaming-table to the bench’ . . . .” 
Blonder-Tongue, 
supra at 322-323 (citations omitted).
13 
 
 
 
 
 
 
  
 
 
                                                 
 
 
 
712; 415 NW2d 286 (1987), plaintiff was convicted of a sex­
related crime. 
In his direct appeal from the conviction, 
plaintiff claimed that his attorney rendered ineffective 
assistance of counsel, but the conviction was affirmed. 
Plaintiff then sued the attorney for legal malpractice, 
essentially asserting the same grounds as those alleged in 
his criminal appeal. 
As an affirmative defense, the 
attorney filed a motion for summary disposition asserting 
that collateral estoppel barred the subsequent litigation. 
The trial court agreed and granted the attorney’s motion, 
and the Court of Appeals affirmed, holding that mutuality 
of estoppel was not required where: (1) collateral estoppel 
was being asserted defensively and (2) the plaintiff had an 
opportunity to litigate the issue in a prior proceeding. 
Knoblauch, supra at 725.9 
Persuaded by the reasoning of Knoblauch and of the 
countless other courts that have adopted a similar test,10 
9 This rule has been followed in subsequent decisions
of the Court of Appeals. See Alterman v Provizer, 195 Mich
App 422, 424-425; 491 NW2d 868 (1992); Schlumm v Terrance J 
O’Hagan, PC, 173 Mich App 345, 357; 433 NW2d 839 (1988). 
10 See, e.g., Adriaanse v United States, 184 F2d 968
(CA 2, 1950); Bruszewski v United States, 181 F2d 419 (CA
3, 1950); Graves v Associated Transport, Inc, 344 F2d 894
(CA 4, 1965); Davis v McKinnon & Mooney, 266 F2d 870 (CA 6,
1959); Federal S&L Ins Corp v Hogan, 476 F2d 1182 (CA 7,
1973); Fisher v Jones, 311 Ark 450; 844 SW2d 954 (1993);
Murphy v Northern Colo Grain Co, 30 Colo App 21; 488 P2d
103 (1971); Aetna Cas & Surety Co v Jones, 220 Conn 285;
596 A2d 414 (1991); Coca-Cola Co v Pepsi Cola Co, 172 A 260
14 
 
 
 
                                                                                                                                                 
 
we believe that the lack of mutuality of estoppel should 
not preclude the use of collateral estoppel when it is 
asserted defensively to prevent a party from relitigating 
an issue that such party has already had a full and fair 
opportunity to litigate in a prior suit. 
Such a belief is 
supported by the Restatement of Judgments. 
“A party 
precluded from relitigating an issue with an opposing party 
. . . is also precluded from doing so with another person 
unless . . . he lacked full and fair opportunity to 
litigate the issue in the first action . . . .” 
1 
Restatement Judgments, 2d, ch 3, § 29, p 291. “A party who 
has had a full and fair opportunity to litigate an issue 
has been accorded the elements of due process. There is no 
good reason for refusing to treat the issue as settled so 
(Del Super, 1934); Ellis v Crockett, 51 Hawaii 86; 451 P2d
814 (1969); Anderson v Pocatello, 112 Idaho 176; 731 P2d
171 (1986); White v Allstate Ins Co, 605 NE2d 141 (Ind,
1992); Pat Perusse Realty Co v Lingo, 249 Md 33; 238 A2d
100 (1968); Home Owners Fed S&L Ass’n v Northwestern Fire & 
Marine Ins Co, 354 Mass 448; 238 NE2d 55 (1968); Gammel v 
Ernst & Ernst, 72 NW2d 364 (Minn, 1955); Thomas M McInnis & 
Associates, Inc v Hall, 318 NC 421; 349 SE2d 552 (1986);
Sanderson v Balfour, 109 NH 213; 247 A2d 185 (1969); Silva 
v State, 106 NM 472; 745 P2d 380 (1987); Ettin v Ava Truck 
Leasing, Inc, 53 NJ 463; 251 A2d 278 (1969); Posternack v 
American Cas Co, 421 Pa 21; 218 A2d 350 (1966); Black Hills 
Jewelry Mfg Co v Felco Jewel Industries Inc, 336 NW2d 153
(SD, 1983); Crowall v Heritage Mut Ins Co, 118 Wis 2d 120;
346 NW2d 327 (1984). 
See also anno: Mutuality of estoppel
as prerequisite of availability of doctrine of collateral 
estoppel to a stranger to the judgment, 31 ALR3d 1044, § 4,
pp 1072-1073; 47 Am Jur 2d, Judgments, § 648, pp 54-55; 18
Moore’s 
Fed 
Practice 
(3d 
ed), 
Issue 
preclusion 
and 
collateral estoppel, § 132.04[2][b]-[c][ii], pp 156-162.
15 
 
 
 
 
 
  
                                                 
 
 
far as he is concerned other than that of making the burden 
of litigation risk and expense symmetrical between him and 
his adversaries.” 
Judgments, p 292, comment b. 
In 
circumstances 
where 
mutuality 
is 
required 
and 
where 
collateral estoppel is asserted defensively, the mutuality 
requirement only encourages gamesmanship by a plaintiff.11 
See n 8. 
A party is entitled to his day in court on a 
particular issue, and is not entitled to his day in court 
against a particular adversary. 
31 ALR3d 1044, § 4, p 
1068. 
The doctrine of collateral estoppel is intended “‘to 
relieve parties of the cost and vexation of multiple 
lawsuits, conserve judicial resources, and, by preventing 
inconsistent decisions, encourage reliance on adjudication 
. . . .’” 
Detroit v Qualls, 434 Mich 340, 357 n 30; 454 
11 Because nonparties, such as defendant, receive no
notice of third-party actions and thus are generally
unaware of such actions, we are perplexed as to how 
“abandoning 
the 
mutuality 
requirement 
under 
these 
circumstances would . . . reward defendant’s gamesmanship.”
Post at 9 (emphasis added). 
If plaintiff believed, as the
dissent contends, that defendant, by not requesting to be
joined 
in 
the 
third-party 
action, 
was 
employing
“gamesmanship,” plaintiff had the authority to attempt to
join defendant. 
MCR 2.206(A)(1). 
However, because “there
are rarely tactical reasons for refraining from joining all
potential defendants,” we believe that it was plaintiff
who, by choosing not to attempt to join defendant as a
party was employing “gamesmanship” and was planning to use
the instant action, if necessary, “merely [as] a renewal of
[his] previously unsuccessful effort.” 
1 Restatement 
Judgment, 2d, ch 3, § 29, p 301 reporter’s note. See also 
Ritchie v Landau, 475 F2d 151, 156 n 5 (CA 2, 1973).
16 
 
 
   
                                                 
 
NW2d 374 (1990), quoting Allen v McCurry, 449 US 90; 101 S 
Ct 411; 66 L Ed 2d 308 (1980). 
By refusing to adopt the 
majority’s test, the dissent does nothing to preserve the 
underpinnings of collateral estoppel. 
The dissent would 
require defendants to relitigate previously adjudicated 
issues;12 it would require the judicial system to employ 
scarce resources repeatedly adjudicating the same issue; it 
would increase the likelihood of inconsistent decisions 
being rendered by the judicial process; it would promote 
opportunities for parties to use the judicial process in a 
vexatious manner; and it would require defendants to expend 
resources relitigating issues. Each of these effects would 
only weaken our judicial process.13 
Further, the dissent, at least in part, apparently 
bases its position on the notion that fairness, in the 
context of defensive collateral estoppel, is determined 
12 Given that there are over sixty years of experience
regarding the defensive use of collateral estoppel in the
absence of mutuality, see Bernhard, supra, the dissent’s
fear that the “full and fair” standard will “open the
Pandora’s box,” causing judicial resources to be spent
litigating whether a prior adjudication was “full and 
fair,” appears unfounded. Post at 7 (citation omitted).
13 The test that we set forth today is fully consistent
with 
our 
understanding 
of 
collateral 
estoppel 
as 
“strik[ing] a balance between the need to eliminate 
repetitious litigation and the interest in affording
litigants a full and fair adjudication of the issues 
involved in their particular claims.” 
Post at 1. 
Such 
test serves both these interests without diluting either. 
17  
 
 
 
 
                                                 
 
only on the basis of symmetry. Post at 9-10.14  However, as 
explained in Bruszewski v United States, 181 F2d 419 (CA 3, 
1950), the achievement of "substantial justice," rather 
than symmetry, is the proper measure of fairness in the 
context of defensive collateral estoppel: 
This second effort to prove negligence is
comprehended by the generally accepted precept
that a party who has had one fair and full
opportunity to prove a claim and has failed in
that effort, should not be permitted to go to
trial on the merits of that claim a second time. 
Both 
orderliness 
and 
reasonable 
time 
saving
judicial administration require that this be so
unless some overriding consideration of fairness
to a litigant dictates a different result in the
circumstances of a particular case. 
The countervailing consideration urged here
is lack of mutuality of estoppel. In the present
suit 
[the 
plaintiff] 
would 
not 
have 
been 
permitted 
to 
take 
advantage 
of 
an 
earlier 
affirmative 
finding 
of 
negligence, 
had 
such 
finding been made in [his first suit against a
different defendant]. For that reason he urges
that he should not be bound by a contrary finding
in that case. 
But a finding of negligence in
[the plaintiff’s first suit] would not have been
binding against the [defendant in a second suit]
because [that defendant] had no opportunity to
contest the issue there. 
The finding of no
negligence on the other hand was made after full
opportunity 
to 
[the 
plaintiff] 
on 
his 
own 
election to prove the very matter which he now 
14 “[W]e should firmly keep in mind that we are 
considering 
the 
situation 
where 
the 
[plaintiff] 
was 
plaintiff in the prior suit and chose to litigate at that
time and place. 
Presumably, he was prepared to litigate
and to litigate to the finish against the defendant 
[involved in the prior suit]. 
[Accordingly,] there is no
reason to suppose that [the plaintiff] would face either
surprise or unusual difficulties in getting all relevant 
and probative evidence before the court in the first 
litigation.” Blonder-Tongue, supra at 332. 
18 
 
 
 
 
 
 
 
   
 
                                                 
urges a second time. Thus, no unfairness results
here from estoppel which is not mutual. 
In 
reality the argument of [the plaintiff] is merely
that the application of res judicata in this case
makes the law asymmetrical. 
But the achievement 
of substantial justice rather than symmetry is
the measure of the fairness of the rules of res 
judicata. [Id. at 421.] 
IV. CONCLUSION 
In an effort to promote the efficient administration 
of 
justice 
and 
to 
ensure 
more 
consistent 
judicial 
decisions, we hold that, where collateral estoppel is being 
asserted defensively against a party who has already had a 
full and fair opportunity to litigate the issue, mutuality 
is not required. 
Further, because both requirements of 
this test have been satisfied here, we reverse the judgment 
of both the trial court and the Court of Appeals, remand 
this case to the trial court, and order it to grant 
defendant’s motion for summary disposition.15 
Maura D. Corrigan
Elizabeth A. Weaver 
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman 
15 We believe that the instant decision should be given
full retroactive effect because, contrary to the dissent’s
assertion, this decision does not “represent[] a sweeping
change in the law.” 
Post at 10. 
Rather, there is no
previous decision of this Court that has decided whether
mutuality should apply in the defensive context. See ns 5­
6. 
19  
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
FRANK MONAT, 
Plaintiff-Appellee, 
No. 121122 
STATE FARM INSURANCE COMPANY, 
Defendant-Appellant. 
CAVANAGH, J. (dissenting). 
In this first-party, no-fault action, defendant seeks 
to invoke the doctrine of collateral estoppel to preclude 
plaintiff from relitigating an issue decided in plaintiff’s 
third-party negligence action. We are again called upon to 
examine the mutuality requirement of the doctrine of 
collateral estoppel as it has been traditionally applied in 
Michigan. 
Because the majority imprudently departs from 
this tradition, I must respectfully dissent. 
The doctrine of collateral estoppel, also known as 
issue preclusion, strikes a balance between the need to 
eliminate repetitious litigation and the interest in 
affording litigants a full and fair adjudication of the 
issues involved in their particular claims. 
Storey v 
Meijer, Inc, 431 Mich 368, 372-373; 429 NW2d 169 (1988). 
As a preclusion doctrine, collateral estoppel serves “an 
 
 
 
important function in resolving disputes by imposing a 
state of finality to litigation where the same parties have 
previously had a full and fair opportunity to adjudicate 
their claims.” 
Nummer v Dep’t of Treasury, 448 Mich 534, 
541; 533 NW2d 250 (1995) (emphasis added). 
Collateral 
estoppel applies when a question of fact essential to the 
judgment was actually litigated and determined by a valid 
and final judgment. 
Senior Accountants, Analysts & 
Appraisers Ass’n v Detroit, 399 Mich 449, 458; 249 NW2d 121 
(1976); Howell v Vito’s Trucking & Excavating Co, 386 Mich 
37, 41-42; 191 NW2d 313 (1971). 
In addition, Michigan law 
requires mutuality of estoppel. 
Storey, supra at 373 n 3; 
Howell, supra at 41-42; Lichon v American Universal Ins Co, 
435 Mich 408, 427; 459 NW2d 288 (1990). 
“[M]utuality of estoppel requires that in order for a 
party to estop an adversary from relitigating an issue that 
party must have also been a party, or privy to a party, in 
the previous action.” 
Lichon, supra at 427. 
Stated 
differently, 
“estoppel 
is 
mutual 
if 
the 
one 
taking 
advantage of the earlier adjudication would have been bound 
by it, had it gone against him.” 
Howell, supra at 43 
(citations omitted). 
Unless both parties in a subsequent 
action are bound by a prior judgment, neither party may use 
that prior judgment as determinative of an issue in the 
subsequent action. 
2 
 
 
 
 
 
 
Until 
today’s 
decision, 
mutuality 
of 
estoppel 
unquestionably remained the law in Michigan. 
Because 
defendant was not a party in the third-party action, 
mutuality is absent and collateral estoppel could not be 
invoked. 
Further, defendant acknowledged that had the 
issue of plaintiff’s injury been decided unfavorably to 
defendant’s position, it would not have been bound by the 
earlier judgment. 
Nonetheless, defendant asked this Court 
to either abrogate the mutuality requirement or create a 
new exception so that it may now use the prior judgment for 
its 
own 
advantage. 
The 
majority 
eagerly 
granted 
defendant’s request and joined the so-called “modern 
trend.” 
For 
many 
years, 
mutuality 
of 
estoppel 
was 
the 
recognized rule, but the rule began to come under fire by 
courts in other jurisdictions. 
See, e.g., Bernhard v Bank 
of America Nat’l Trust & Savings Ass’n, 19 Cal 2d 807; 122 
P2d 892 (1942). 
The modern trend has been to abandon the 
mutuality 
requirement 
in 
whole 
or 
in 
part. 
Some 
jurisdictions have rejected mutuality depending on whether 
collateral estoppel is asserted offensively or defensively. 
Other jurisdictions, however, have continued to adhere to 
3  
 
 
   
                                                 
 
  
the mutuality requirement despite the modern trend.1 
Defendant’s arguments in support of yielding to the 
modern trend, such as preserving judicial resources, are by 
no means novel and have previously been rejected by this 
Court. In fact, this Court has consistently and explicitly 
declined the invitation to follow the modern trend. 
In 
1971, this Court made a conscious decision to resist the 
modern 
trend 
and 
refused 
to 
abrogate 
the 
mutuality 
requirement. Howell, supra at 43. This Court stated: 
A more fundamental reason for declining
plaintiff's invitation to abandon the requirement
of mutuality is that we are not convinced that to
do so would promote the ends of justice or 
increase efficiency in the administration of our
courts. Surely, we must strike a balance between
the competing interests: (a) that the litigant
against whom the doctrine is asserted has had his
day 
in 
court; 
vis-à-vis 
[sic] 
(b) 
that 
repetitious and needless litigation which burden
our already overloaded court dockets must be 
1 See, e.g., Leon C Baker, PC v Merrill Lynch, Pierce, 
Fenner & Smith, Inc, 821 So 2d 158, 165 (Ala, 2001),
quoting McMillian v Johnson, 878 F Supp 1473, 1520 (MD Ala,
1995)(“’It is noteworthy that Alabama has not followed the
trend of abolishing the requirement that parties be 
identical, sometimes referred to as the mutuality of 
estoppel requirement.’”); EC v Katz, 731 So 2d 1268, 1270
(Fla, 
1999)(“This 
case 
falls 
squarely 
within 
our 
traditional requirement that there be mutuality of parties
in order for collateral estoppel to apply defensively.”);
Hofsommer v Hofsommer Excavating, Inc, 488 NW2d 380, 384
(ND, 1992)(“Although the principle of mutuality has been 
abandoned in numerous jurisdictions . . . , this court has
applied the mutuality rule as a prerequisite to the 
application of collateral estoppel.”); Rawlings v Lopez,
267 Va 4; 591 SE2d 691 (2004)(reaffirming Virginia’s 
adherence to the principle of mutuality in the context of
defensive collateral estoppel).
2 
 
 
 
  
avoided. But we need not sacrifice a well­
established and valuable rule to achieve this 
balance. 
 
 
 
 
* * * 
In point of fact, the abandonment of the
mutuality doctrine would in many instances create
more 
pitfalls 
to 
orderly 
and 
efficient 
administration of justice. [Id. at 48-49.] 
Howell 
involved 
a 
case 
of 
offensive 
collateral 
estoppel, but it is evident that the Court was basing its 
commitment to the mutuality requirement on larger policy 
concerns. 
“The course of justice is best served by 
adherence to a long established and definitive rule which 
our bench and bar well recognizes rather than permit an ad 
hoc formulation of a rule based upon innumerable and 
unmanageable factors.” 
Id. at 51. 
As recently as 1990, 
this Court expressly reaffirmed its commitment to mutuality 
of estoppel in a case involving defensive collateral 
estoppel. Lichon, supra at 427-428. 
Again, the arguments in support of abrogation have 
been duly considered by earlier compositions of this Court. 
Despite these earlier decisions, the Court’s current 
majority now finds these rehashed arguments persuasive, 
finding error where none had been discovered before. 
The 
doctrine of stare decisis is more than a fad and decades of 
precedent cannot be readily discounted as the majority 
suggests. 
“This Court has stated on many occasions that 
‘[u]nder the doctrine of stare decisis, principles of law 
3  
 
 
 
deliberately examined and decided by a court of competent 
jurisdiction should not be lightly departed.’” 
Brown v 
Manistee Co Rd Comm, 452 Mich 354, 365; 550 NW2d 215 
(1996), quoting Boyd v W G Wade Shows, 443 Mich 515, 525 n 
15; 505 NW2d 544 (1993) (citations omitted). 
Moreover, 
this Court should “’not overrule a decision deliberately 
made unless [it] is convinced not merely that the case was 
wrongly decided, but also that less injury would result 
from overruling than from following it.’” 
Brown, supra at 
365, quoting Boyd, supra at 524. 
I perceive no error, 
flagrant or otherwise, committed by this Court in our 
earlier decisions that specifically declined to follow the 
modern trend. 
Like the learned members who previously sat 
on this Court, I find defendant’s rehashed arguments 
equally unpersuasive. 
Nor am I persuaded that this Court should create a new 
exception to the mutuality requirement. 
This Court has 
noted 
several 
“well-established” 
exceptions 
to 
the 
mutuality requirement.  Lichon, supra at 428 n 16. 
However, the relationship between plaintiff and defendant 
does not fit into one of these recognized exceptions. 
For 
example, an exception to the mutuality requirement has been 
recognized where the liability of one party is dependent on 
the culpability of the other party. 
DePolo v Greig, 338 
Mich 703, 711; 62 NW2d 441 (1954). 
The relationship
4 
 
 
 
                                                 
 
 
between plaintiff and defendant as insured and insurer is 
simply not the type of special relationship that has 
traditionally formed the basis of the “well-established” 
exceptions.2 
With the adoption of the majority’s new formulation, 
the fears that this Court expressed in Howell are beginning 
to ring true. This Court stated: 
To abandon mutuality and proceed on a “full
and 
fair 
hearing” 
standard 
would 
open 
the 
Pandora’s box of problems rhetorically posed by
Professor Semmel [Collateral estoppel, mutuality
and joinder of parties, 68 Col LR 1457, 1469
(1968)]: 
“The real problem is what standard the court
in 
the 
second 
action 
should 
apply 
if 
it 
undertakes to determine whether the first action 
was litigated ‘with full vigor and opportunity to
be heard.’ 
Does a defendant in a small property
damage claim meet the test? 
If he knows or has 
reason to fear that an adverse decision will be 
utilized by nonparties to the first action, he
may very well proceed with greater vigor, but
there is no assurance of this since insurance 
companies currently seek to dispose of property
damage claims with the minimum of litigation
expense. 
As the dissent in B. R. DeWitt Inc v 
Hall [19 NY2d 141, 148-149; 225 NE2d 195; 278 NYS
2d 596 (1967)] noted, how do we treat cases where
the defendant has different liability insurers
for personal injury claims and property damage
claims? 
How can a judge evaluate the vigor of 
2 I acknowledge that the Court of Appeals has taken
upon itself to create new exceptions to the mutuality
requirement. 
See, e.g., Alterman v Provizer, Eisenberg,
Lichtenstein & Pearlman, PC, 195 Mich App 422; 491 NW2d 868
(1992). 
However, as mentioned above, I am not convinced
that this Court should create a new exception under these
circumstances, nor do I express an opinion relating to any
exceptions created by lower courts.
5 
 
 
 
 
 
litigation in a case in which he did not sit?
How can he weigh the difficulty a defendant faced
by being forced to litigate in one jurisdiction
rather than another? How did the burden of proof
or applicable presumption affect the result?” 
[Howell, supra at 51-52 n 13.] 
The majority insists that the numerous factors set forth by 
the Restatement will assist in determining whether an issue 
is fully and fairly litigated. 
The majority further notes 
that “we do not believe that the factors set forth in the 
Restatement are ‘innumerable or unmanageable . . . .’” 
Ante at 9 n 4. 
Thus, under the majority’s rationale, the 
fears 
detailed 
by 
the 
Howell 
Court 
are 
necessarily 
unfounded. 
In its next breath, however, the majority then 
concludes that plaintiff’s no-appeal agreement is not a 
situation covered by the illuminating factors set forth by 
the Restatement and, therefore, the majority has to resort 
to a waiver analysis to reach its ultimate conclusion that 
plaintiff fully and fairly litigated the injury issue in 
the third-party action. The majority acknowledges that the 
full and fair opportunity analysis is not an easy endeavor 
and courts should “proceed cautiously.” Ante at 7 n 3. As 
a 
practical 
matter, 
however, 
considerable 
judicial 
resources will be spent litigating the full and fair 
opportunity prong. Thus, the facts of this case illustrate 
the idea that judicial economies will not be achieved under 
6  
 
 
                                                 
 
  
the 
majority’s 
new 
approach, 
an 
idea 
previously 
acknowledged by the Howell Court. 
Further, abandoning the mutuality requirement under 
these circumstances would undermine the purpose of the rule 
and 
reward 
defendant’s 
gamesmanship.3
 
Rather 
than 
continuing to pay benefits under the policy and intervene 
in the third-party action, defendant elected to stop making 
payments, thereby compelling plaintiff to expend judicial 
resources by bringing a first-party action. 
Defendant 
consciously made this decision because it knew that if 
plaintiff were found to be injured in the third-party 
action, it would not be bound by that judgment and could 
relitigate the injury issue. 
Alternatively, if plaintiff 
was not found to be injured, defendant could then assert 
the defense of collateral estoppel, cast plaintiff in a 
negative light, and play the odds that this Court would 
step in line and abrogate the mutuality requirement. 
The 
majority 
willingly 
conformed 
and 
even 
rewarded 
such 
maneuvering by inexplicably giving defendant the benefit of 
the new rule of law. 
3 
The majority asserts that first-party, no-fault 
insurers, as nonparties, are generally unaware of third­
party actions involving their insureds. 
Yet, I find it
telling that this defendant stopped paying benefits a short
time after plaintiff filed the third-party action rather 
than simply denying plaintiff’s claim in the first place.
7 
 
 
 
In general, “’judicial decisions are to be given 
complete 
retroactive 
effect.’” 
Michigan 
Educational 
Employees Mut Ins Co v Morris, 460 Mich 180, 189; 596 NW2d 
142 (1999) (citations omitted). 
This Court, however, has 
considered prospective or limited retroactive application 
where well-established law has been changed. 
Id. 
In 
resolving the “retroactive-prospective dilemma,” this Court 
weighs “’(1) the purpose to be served by the new rule, (2) 
the extent of reliance on the old rule, and (3) the effect 
of retroactivity on the administration of justice.’” 
Id. 
at 
190 
(citations 
omitted). 
The 
majority 
opinion 
represents a sweeping change in the law. 
Until today’s 
decision, mutuality remained the law in Michigan. In light 
of the bench and bar’s heavy reliance on the mutuality 
requirement, mutuality’s storied history, and the notion 
that the new rule is unlikely to achieve its stated 
purpose, I am unclear with regard to how the majority can 
justify applying the rule of law announced in today’s 
decision to this particular defendant. 
In sum, I am unwilling to abrogate the mutuality 
requirement in the application of collateral estoppel. 
remain unconvinced that the judicial economies the majority 
claims are achieved by abrogation are sufficient to 
override concerns about the fairness afforded to litigants. 
The mutuality requirement already strikes an evenhanded 
8  
I 
 
 
balance between these competing interests. 
Accordingly, I 
respectfully dissent. 
Michael F. Cavanagh
Marilyn Kelly 
9