Opinion ID: 1463724
Heading Depth: 1
Heading Rank: 3

Heading: collateral estoppel against james

Text: Ordinarily, denial of a motion for summary judgment is an interlocutory order and is not a proper point on appeal. Thus, it need not be addressed. Wilson v. Hungate, 434 S.W.2d 580, 583 (Mo.1968). But even though the ruling in question might normally be considered interlocutory, if the appeal is otherwise properly before the Court, and a question of law is almost certain to arise on retrial and has been fully briefed by the parties, the issue will be addressed as a matter of judicial efficiency and economy. State v.. Schnick, 819 S.W.2d 330, 334 (Mo. banc 1991); State v. Gotthardt, 540 S.W.2d 62, 67 (Mo.1976). State Farm claims it is entitled to summary judgment in the garnishment action under the doctrine of collateral estoppel, also referred to as issue preclusion, because of Paul's plea of guilty in the criminal case. State Farm asserts that the conviction pursuant to the plea of guilty resolved the question of whether Paul's stabbing of James was intentional or willful, resulting in no coverage under the policy. This Court agrees. Before giving preclusive effect to a prior adjudication under collateral estoppel principles, the Court must consider four factors: (1) whether the issue decided in the prior adjudication was identical to the issue presented in the present action; (2) whether the prior adjudication resulted in a judgment on the merits; (3) whether the party against whom estoppel is asserted was a party or was in privity with a party to the prior adjudication; and (4) whether the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior suit. Oates v. Safeco Ins. Co. of Am., 583 S.W.2d 713, 719 (Mo. banc 1979). The doctrine of collateral estoppel will not be applied where to do so would be inequitable. Id. at 721. Each case must be analyzed on its own facts. Id. at 719 (describing the method employed in Bernhard v. Bank of Am. Nat'l. Trust & Sav. Ass'n, 19 Cal.2d 807, 122 P.2d 892 (1942)). The first factor applicable to collateral estoppel is whether the issue in the earlier adjudication and that at issue in the present case are identical. Assault in the first degree requires that the actor attempt to kill or knowingly cause or attempt to cause serious physical injury to another. Sec. 565.050.1. By pleading guilty to that offense, Paul must have acted purposely or knowingly. Secs. 565.050.1; 562.021.3; 564.011.1. One who acts with a purpose to kill or knowing that his conduct was practically certain to result in serious physical injury acts intentionally or willfully. See sec. 562.016.2, .3(2), (3). The issue of intent was identical in both the civil and criminal cases, militating in favor of preclusion. The second factor is whether the plea of guilty resulted in a judgment on the merits. Following the standard practice, the trial judge in the underlying criminal case ensured that the plea was voluntary by inquiring of Paul and his attorney. Rule 24.02(c). The trial court also inquired of the defendant, his attorney and the prosecutor regarding the facts in order to making a determination that a factual basis existed for the plea of guilt. Rule 24.02(e). These determinations were made on the merits of the facts presented and resolved the second factor in favor of collateral estoppel. The third factor to be considered is whether the party to be estopped was a party to or in privity with a party to the prior adjudication. Our courts have stated that privity exists where the party sought to be precluded has interests that are so closely aligned to the party in the earlier litigation that the non-party can be fairly said to have had its day in court. Cox v. Steck, 992 S.W.2d 221, 224 (Mo.App.1999). This somewhat ambiguous description of privity has not always been easy to apply to every set of facts. Danger inheres in a formalistic definition of the word privity. State Farm Fire & Cas. Co. v. Fullerton, 118 F.3d 374, 384 (5th Cir.1997) (citing Charles Alan Wright, Arthur R. Miller and Edward H. Cooper, 18 Federal Practice and Procedure § 4448 (1981)). The uncertainty associated with a formal definition of privity has caused the authors of the Restatement (Second) of Judgments to abandon the term privity altogether. [2] As a substitute, it identifies specific relationships with a criminal defendant that serve the same end as privity. Restatement (Second) of Judgments sec. 85(2)(b). Among the specified relationships is a contractual relationship between a promisee, such as Paul, and a third party beneficiary, such as James. Restatement (Second) of Judgments sec. 56(1). James' claim is clearly that of a third party beneficiary of Paul's contractual relationship with State Farm. A judgment creditor stands in the shoes of the insured and has rights no greater and no less than the insured's rights would have been if the insured paid the judgment and then sought reimbursement from the insurer. Greer v. Zurich Ins. Co., 441 S.W.2d 15, 30 (Mo.1969). Indeed, James makes no claim that his rights exist independent of the terms of Paul's liability policy. It is irrational to say that James has rights greater than if Paul were here attempting to enforce the insurance agreement. Equally clear is that the interest of Paul on the question of whether his attack on James was intentional is tightly aligned with the interest of James in this case. Judge Wolff's separate opinion seizes upon Restatement (Second) of Judgments sec. 85, cmt. f., illus. 10, to argue the lack of privity in this case. The illustration indicates that the victim is not precluded by the criminal conviction from showing in a tort action against the assailant that the criminal act was negligent rather than intentional. Of course, the garnishment proceeding here is not a tort action against Paul but an action derivative of Paul's contract with State Farm. In any event, illustration 10 has been rejected in two of the three cases in which it has been cited. See Aetna Cas. & Sur. Co. v. Jones, 220 Conn. 285, 596 A.2d 414, 425 (1991); Safeco Ins. Co. of Am. v. Yon, 118 Idaho 367, 796 P.2d 1040, 1044 (1990); Massachusetts Prop. Ins. Underwriting Ass'n v. Norrington, 395 Mass. 751, 481 N.E.2d 1364, 1367 (1985). The illustration is also contrary to the majority of recent cases that analyze the issue and recognize the derivative nature of a third party's claim against an insurer and the consequence that the party's rights against the insurer are no greater or less than the insured. See State Farm Fire & Casualty v. Fullerton, 118 F.3d 374, 385 (5th Cir.1997) (holding that privity stems from the derivative nature of the plaintiff's claim); American Family Mut. Ins. Co. v. Savickas, 193 Ill.2d 378, 250 Ill.Dec. 682, 739 N.E.2d 445, 453 (2000) (concluding the plaintiff's rights were entirely derivative of the insured's contractual rights, and the plaintiff can have no greater rights against the insurer than the insured). Thus, James, whose claim is derivative of Paul's contractual rights, is in privity with Paul. [3] The fourth factor identified in Oates is subject to some misunderstanding. The full and fair opportunity to litigate the issue in the first suit is not a second layer of privity analysis under which only those in privity who had actual notice and an opportunity to intervene may be bound by a prior adjudication. Rather, it is a shorthand description of the analysis required to determine if non-mutual collateral estoppel should be applied. [4] The principle of non-mutual collateral estoppel, as adopted in Missouri, permits use of a prior judgment to preclude relitigation of an issue even though the party asserting collateral estoppel was not a party to the prior case. In re Caranchini, 956 S.W.2d 910, 911 (Mo. banc 1997). In determining whether non-mutual collateral estoppel will apply, the Court considers first whether the doctrine is being applied offensively or defensively. See Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 329-30, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); State ex rel. O'Blennis v. Adolf, 691 S.W.2d 498, 502 (Mo.App.1985). Defensive collateral estoppel generally involves a defendant invoking the doctrine to prevent a plaintiff from relitigating a fact decided against the plaintiff in earlier litigation that is necessary for the plaintiff to establish and carry his burden of proof. O' Blennis, 691 S.W.2d at 502; see also Estate of Laspy, 409 S.W.2d 725, 731 (Mo. App.1966) (a judicial determination of guilt held to collaterally estop the widow who killed her husband, the decedent, from inheriting). By contrast, offensive collateral estoppel normally involves the attempt by a plaintiff to rely on a prior adjudication of an issue to prevent the defendant from challenging a fact necessary to the plaintiff's case and on which the plaintiff carries the burden of proof. Id. Generally speaking, courts have been less inclined to allow offensive use of the doctrine rather than defensive when mutuality of parties is lacking. Id.; see also Pruiett v. Wilform, 477 S.W.2d 76, 80 (Mo.1972); Ferguson v. Boyd, 448 S.W.2d 901, 903 (Mo.1970); Nichols v. Blake, 418 S.W.2d 188, 190 (Mo. 1967); Howard v. Riley, 409 S.W.2d 154, 156 (Mo.1966); Sullivan v. Spears, 871 S.W.2d 75, 76 n. 1 (Mo.App.1994); LaMartina v. Hannah, 675 S.W.2d 444, 445-46 (Mo.App.1984). [5] In those cases, the courts held only that the plea of guilty is admissible in evidence, and the party making the plea must make an explanation of the plea. Non-mutual collateral estoppel was first recognized in Oates . For obvious reasons, cases decided prior to Oates relied only on the evidentiary rule that the plea of guilty was admissible but not conclusive and did not take into account the non-mutual collateral estoppel analysis Oates now requires. This practice continued after Oates . Yet in each case except two the courts reached the result Oates dictates, because each involved a claimed offensive use of the doctrine. Compare Estate of Laspy (though a pre- Oates case, it held that collateral estoppel prevented the wife and convicted killer of the decedent from inheriting from his estate, a defensive use of a criminal conviction by the estate). After Oates , two cases, Wallace v. Director of Revenue, 786 S.W.2d 893 (Mo.App.1990), and Curtain v.. Aldrich , 589 S.W.2d 61 (Mo.App.1979), continued to cite the pre- Oates cases for the evidentiary rule, but failed to recognize they were dealing with defensive claims of collateral estoppel or engage in the analysis required by Oates . As a result, those cases create an arguable inconsistency with Oates . To the extent Curtain and Wallace are arguably inconsistent with Oates , they are overruled. In the instant case, State Farm invokes collateral estoppel defensively. The primary reason for distinguishing between offensive and defensive use of collateral estoppel is the equitable nature of the doctrine. Here, one equitable concern is whether the failure to give preclusive effect to a plea of guilty will permit the party who pleaded guilty to assert facts contrary to the plea of guilty, thereby permitting the criminal defendant to profit from her own fraud or wrongdoing. O' Blennis, 691 S.W.2d at 504 ( citing Estate of Laspy, 409 S.W.2d at 730 (Mo.App. 1966)). This concern, coupled with the fact that State Farm is attempting to use the doctrine defensively, suggests that the fourth factor does not weigh against collateral estoppel in this case. Because of the higher burden of proof and other procedural protections, a defendant in a criminal case has a full and fair opportunity to litigate the elements of an offense, including those relating to the culpable mental state. Yet another equitable consideration relevant to the analysis of whether a full and fair opportunity to litigate the issue occurred is whether the criminal conviction resulted from a trial or a plea of guilty. Nearly all jurisdictions hold that a conviction after a criminal trial is preclusive as to issues actually determined by that trial as to the defendant and those in privity with the defendant, which includes those claiming under the defendant's liability insurance policy. American Family Mut. Ins. Co. v. Savickas, 193 Ill.2d 378, 250 Ill.Dec. 682, 739 N.E.2d 445, 449 (2000); Restatement (Second) of Judgments sec. 85. The same is not true where there was a plea of guilty in the earlier case. Jurisdictions other than Missouri that have faced the precise issue in this case have split fairly evenly, the recent trend being to apply collateral estoppel defensively in a civil proceeding following a plea of guilty. The Fifth Circuit, applying Texas law, addressed a case nearly identical to this one in State Farm Fire & Cas. Co. v. Fullerton, 118 F.3d 374 (5th Cir.1997). Fullerton observed that numerous cases treat a guilty plea with the same preclusive effect as a conviction following a full-blown trial. [6] Fullerton lists a number of policy reasons for giving a plea of guilty the same preclusive effect as a finding of guilt. Foremost is that the majority of states, including Missouri, cannot accept a plea of guilty or an Alford plea [7] in a felony case unless the defendant is found to be mentally competent, the plea is freely and voluntarily given, and a factual basis exists for the plea. Fullerton, 118 F.3d at 381; see also Rule 24.02(c), (e). To the contrary, an almost equal number of states make a distinction between the preclusive effect arising from a guilty plea as opposed to a full trial. [8] Many of these cases rely on sec. 85 of the Restatement (Second) of Judgments cmt. b, indicating that a plea of guilty should not be given the same preclusive effect for collateral estoppel purposes given a finding of guilt. But the cases that rely on the Restatement fail to appropriately scrutinize the Restatement's rationale for estoppel. Specifically, the Restatement creates an unreasonable distinction between criminal pleas of guilty and criminal convictions at trial, without any real analysis. It fails to recognize that, in modern practice, a felony plea of guilty requires an evidentiary basis for the plea in which the facts are explored by the parties and the court, and a judicial determination is made with respect to the essential elements of the crime. Ideal Mutual Ins. Co. v. Winker, 319 N.W.2d 289, 296 (Iowa 1982). As noted in Fullerton , the driving force behind issue preclusion is the concern for equity and sound public policy: Treating the question of intent as resolved will not only cut short declaratory judgment suits such as this one; it will also expedite the adjudication of victims' suits against an insured who has admitted his responsibility for a criminal act. As the results of the trial court here demonstrate, the danger of inconsistent judgments looms large. We recognize that criminal defendants sometimes enter guilty pleas for reasons other than the truth of the charges against them. But it is disquieting when a judicial system tolerates the continued incarceration of those defendants and at the same time, awards civil damages based on findings that those defendants did not commit all the elements of the crimes for which they are being punished. Id. at 386-87. Missouri's rules of criminal procedure ensure courts accept guilty pleas only under appropriate circumstances. Therefore, the judicial system's interest in consistent judgments does not automatically give way when a plea of guilty is entered. So, consistency as well weighs in favor of preclusion in this case. James argues that the policy of consistency of judgments having preclusive effect is not advanced by applying collateral estoppel here because, in this case, there are already two inconsistent judgments, the criminal and the later civil judgment against Paul. The argument is sophistry. The civil judgment was, in effect, a default judgment where both the plaintiff and defendant had parallel interests to advance in obtaining a fact finding inconsistent with the criminal judgment. Both Paul and James carefully avoided seeking any judicial relief against State Farm on the coverage question until the default judgment had been entered. As will be discussed in Part IV, the determination of questions touching on culpability in the civil judgment against Paul were not entitled to any preclusive effect against State Farm under principles of collateral estoppel. Indeed, the doctrine of collateral estoppel was designed, in part, to eliminate the very sort of legal maneuvering that occurred here, leading to superficially inconsistent findings. To fail to apply the doctrine in favor of State Farm is virtually certain to encourage continued legal stratagems designed to create inconsistent factual adjudications. Other equitable arguments support giving Paul's guilty plea preclusive effect. If issue preclusion is not permitted, Paul will, in effect, be insulated by an insurer from the full brunt of economic responsibility resulting from his admittedly intentional criminal act. This runs contrary to the public policy of Missouri. State Farm Fire & Cas. Co. v. Caley, 936 S.W.2d 250, 253 (Mo.App.1997). Both James and Paul stood to profit from Paul's duplicity in admitting intentional wrongdoing in the criminal proceeding [9] while, in effect, denying it in the present case. Applying collateral estoppel in this situation serves to prevent the potential of collusive litigation as well as promoting the other policies of finality, consistency and judicial economy discussed above. As previously noted, application of collateral estoppel ultimately depends on principles of fairness derived from the facts of each case. The record here includes the transcript of the plea of guilty that was attached to the motion for summary judgment. That transcript includes a finding by the criminal trial judge that Paul voluntarily and intelligently pleaded guilty to the offense of first degree assault of James. James filed no response attacking the validity of the plea of guilty. Once the transcript was filed establishing the factual determination by a judgment that Paul's conduct was intentional, James could not rest on mere allegations or denials, but he was required to show by affidavit or otherwise that State Farm was not entitled to summary judgment. ITT Commercial Finance v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993); Economy Fire & Casualty Co. v. Haste, 824 S.W.2d 41, 46 (Mo.App.1991); Rule 74.04(c). To overcome the preclusive effect of the facts judicially determined by Paul's plea, it was incumbent on James not just to produce a psychiatrist's affidavit, made four years after the plea of guilty, alleging that Paul was mentally unable to intentionally stab James. James was also required to show Paul's plea of guilty itself was in some respect tainted so as to make application of collateral estoppel inequitable. At the plea hearing, Paul denied any history of mental illness except counseling related to his marital breakup. The only hints of such illness were his statements that he just lost control, became enraged, and snapped when he saw his wife having sex with James. The statements, taken in context and in conjunction with his denial of any mental illness, are insufficient to undermine confidence in the plea of guilty. By his plea of guilty and conviction, Paul admitted his culpability for his role in the criminal violation. Cork v. St. Charles County, 10 S.W.3d 608, 609 (Mo.App.2000). There was absolutely no evidence that Paul's plea was involuntary, that he was unduly pressured into entering the plea, that he was not effectively represented by counsel, or that any other reason existed undermining confidence in the plea of guilty or the determination of a factual basis for that plea. This Court should not speculate that Paul had some hidden reason or felt some unstated pressure to plead guilty, when such fact was not supported by an affidavit or other proof in the trial court. Application of the doctrine of collateral estoppel to a plea of guilty as used defensively in this case is not inequitable, given the record with which the Court is presented.