Opinion ID: 196943
Heading Depth: 1
Heading Rank: 1

Heading: Background & Prior Proceedings

Text: 2 On July 17, 1990, Porn, a Connecticut resident, was involved in an automobile accident in Portland, Maine, when motorist Lori Willoughby sped through a stop sign and broadsided his vehicle. Because his damages exceeded Willoughby's $20,000 policy limit, Porn made a claim to National Grange under his automobile policy seeking recovery from the underinsured motorist indorsement to the policy. For reasons not apparent in the record, National Grange refused to pay the claim. 3 Disgruntled by this refusal, Porn wrote to National Grange accusing it of bad faith in handling his claim and threatening legal action. Porn sent copies of his letter to the insurance commissioners of Connecticut and Massachusetts. National Grange, unimpressed, remained steadfast in its refusal to pay, and in November 1993, Porn filed suit against National Grange in Maine's federal district court for breach of the insurance contract (first action). 4 Because Porn's policy with National Grange required a finding of legal liability on the part of the underinsured motorist as a condition precedent to the payment of benefits, the two-day trial before the magistrate judge 1 focused on the question of Willoughby's negligence and Porn's contributory negligence. Following the completion of the evidence, the magistrate judge entered judgment as a matter of law for Porn on the issue of contributory negligence, and the jury returned a verdict for Porn, finding that Willoughby's negligence had caused him $400,000 worth of damages. After reducing the jury's award to reflect Porn's $300,000 underinsured motorist policy limit and appropriate set-offs, the magistrate judge entered judgment for Porn in the amount of $255,314.40. The magistrate judge denied Porn's motion for prejudgment interest, finding that while Maine law allows prejudgment interest in excess of the policy limit where the insurer acted in bad faith and needlessly prolonged the litigation, Porn had presented no evidence that National Grange exhibited such behavior. 5 Six months later, Porn commenced this action against National Grange in Maine's federal district court (second action). This time Porn alleged that National Grange's conduct in handling his underinsured motorist claim constituted breach of the covenant of good faith, intentional infliction of emotional distress, negligent infliction of emotional distress, and violations of the Connecticut Unfair Insurance Practices Act and the Connecticut Unfair Trade Practices Act. National Grange moved for summary judgment, arguing that the judgment in the first action precluded Porn from bringing the second action. The district court accepted that argument and granted summary judgment in favor of National Grange on the grounds that (1) one aspect of Porn's bad-faith claim was barred by issue preclusion and (2) all of Porn's claims were barred by claim preclusion. 6 In reaching its first holding, the district court explained that the magistrate judge's decision not to award Porn prejudgment interest was based in part on his finding that Porn had presented no evidence to suggest that National Grange acted in bad faith and needlessly prolonged the litigation. Accordingly, the court concluded that the question of National Grange's alleged bad-faith conduct in litigating the first action was raised and decided in the first action, and, therefore, to the extent Porn's bad-faith claim involved National Grange's conduct during the first action, it was barred by issue preclusion. 7 In reaching its broader holding that all five of Porn's claims were barred by claim preclusion, the district court reasoned that once Porn chose to bring the first action against National Grange for breach of contract, he was required to raise all his claims arising from the breach or else forfeit the right to do so. Because it found that Porn's five tort and statutory claims, like the earlier breach of contract claim, involved National Grange's obligations arising under the insurance policy, the district court concluded that they should have been brought in the first action and therefore were barred by claim preclusion from being raised in the second action.