Opinion ID: 1172244
Heading Depth: 2
Heading Rank: 1

Heading: Collateral estoppel and the directed verdict

Text: A review of the trial court record in this action reveals ample evidence that at least some APAAC members knew of Heinze's improper conduct. Relevant portions of the transcripts and depositions taken in the tort case were part of the declaratory judgment action record. In those depositions, APAAC staff attorneys admitted having seen Heinze fondle female employees and force them to kiss him at holiday parties, and heard him use crude and sexually explicit language. Likewise, some Council members heard Heinze use rough, sexually explicit language and had received complaints from outside attorneys about Heinze's use of pejoratives of a sexual nature. Finally, at a conference in May 1988, a former clerk spoke with a Council member and a former APAAC employee about Heinze's propensity to treat women employees as his harem. The clerk had also complained to the staff attorneys about the unwanted attention from Heinze, to no avail. Thus, as the court of appeals acknowledges, there was evidence in the tort case from which the judge could have found as a matter of law that Heinze's actions were or should have been known to some Council members. Schallock, 185 Ariz. at 218, 914 P.2d at 1310. However, because the entire evidentiary record from the tort case is not before us, it is impossible to fully ascertain the grounds on which the judge based his directed verdict ruling.
The first issue on which we granted review was whether the doctrine of collateral estoppel applies to the directed verdict in the tort case and precludes the state from arguing the issue of course and scope in the present coverage case. If so, the directed verdict ruling would have concluded the state's indemnity obligation for Heinze's torts under the coverage provisions of A.R.S. § 41-621(A). The court of appeals held the directed verdict did not collaterally estop the state from denying coverage in either Schallock's or Saunders' case. Both the court of appeals and the state relied on Chaney Bldg. Co. v. City of Tucson to support the argument that the issue was not fully litigated and therefore does not preclude further litigation. In Chaney, we held collateral estoppel applies to an issue if (1) it has been actually litigated, and (2) final judgment has been entered. 148 Ariz. 571, 573, 716 P.2d 28, 30 (1986). Schallock and Saunders argue that numerous cases from states other than Arizona, particularly Chemetron Corp. v. Business Funds, Inc., support the proposition that the issue was fully litigated despite the lack of a final judgment. They cite Chemetron 's holding that the party against whom collateral estoppel is being used offensively, as in Saunders' case, need only have had a full and fair opportunity to litigate the issue in the prior case. 682 F.2d 1149, 1189 (5th Cir.1982). Arizona case law already directly addresses this problem. See City of Glendale v. Aldabbagh, 939 P.2d 418 (Ariz.Sup.Ct.1997) (findings at preliminary injunction hearing not sufficient to permit application of collateral estoppel doctrine because case settled before final adjudication). Thus, because no judgment was entered, the verdict does not rise to the level required for collateral estoppel. There is, of course, a fundamental difference between a verdict and a judgment, the one being the jury's finding on the facts; and the other, the Judge's determination of the case upon the verdict. A verdict, before judgment has been entered thereon, has no finality, cannot be executed and cannot be pleaded in bar as res judicata or offered in evidence as collateral estoppel. State v. Williams, 131 Ariz. 211, 213, 639 P.2d 1036, 1038 (1982) (quoting Neely v. State, 210 Tenn. 52, 356 S.W.2d 401 (1962)) (citations omitted). This position is further supported by the commentators in 50 C.J.S. Judgments § 697 (A verdict on which no judgment was entered ... is not, as a rule, conclusive on the parties in a subsequent suit.) and 46 Am.Jur.2d Judgments § 563 ([T]he application of the doctrine [of res judicata] may not be predicated upon a verdict... upon which no judgment is rendered....).