Opinion ID: 1733805
Heading Depth: 1
Heading Rank: 1

Heading: Res Judicata (Claim Preclusion and Issue Preclusion).

Text: In its answer to Israel's petition in equity, FMI affirmatively alleged res judicata as a defense. The trial court based its decision for defendant in part upon that affirmative defense, concluding that Israel's action for indemnity was barred by the judgment entered in favor of Crane and against both defendants in the first lawsuit. Israel first argues that res judicata, whether referred to in the sense of claim preclusion or issue preclusion, is inapplicable to the facts and circumstances of this case. A. Claim Preclusion. For several years this court has used the terms claim preclusion and issue preclusion in place of the generic historical term, res judicata. See Noel v. Noel, 334 N.W.2d 146, 148 (Iowa 1983); Goolsby v. Derby, 189 N.W.2d 909, 913 (Iowa 1971). See also Restatement (Second) of Judgments §§ 18, 19, 27 (1982). We have adopted the terminology of Professor Allan D. Vestal who defined claim preclusion to mean that further litigation on the claim is prohibited and issue preclusion to mean that further litigation on a specific issue is barred. A. Vestal, Preclusion/Res Judicata Variables: Parties, 50 Iowa L.Rev. 27-28 (1964); see Goolsby v. Derby, 189 N.W.2d at 913. Res judicata as claim preclusion applies when a litigant has brought an action, an adjudication has occurred, and the litigant is thereafter foreclosed from further litigation on the claim. A. Vestal, Res Judicata/Preclusion, p. V-43 (1969). An adjudication in a former suit between the same parties on the same claim is final as to all matters which could have been presented to the court for determination. A party must litigate all matters growing out of its claim at one time rather than in separate actions. See B & B Asphalt Co. v. T.S. McShane Co., 242 N.W.2d 279, 286 (Iowa 1976). Claim preclusion is not applicable to the facts in this case, however, because neither Israel nor FMI filed a cross-claim against the other for indemnity in the first lawsuit. Such a cross-claim was not compulsory but permissive. Iowa R.Civ.P. 33. Israel's claim for indemnity did not accrue until judgment was entered against him. See Vermeer v. Sneller, 190 N.W.2d 389, 392 (Iowa 1971). The right to join related causes of action does not bar subsequent litigation of a distinct cause of action that was not joined. Westway Trading Corp. v. River Terminal Corp., 314 N.W.2d 398, 401 (Iowa 1982). There having been no asserted or required indemnity crossclaim in the first lawsuit, there was no prior adjudication of such a claim and no preclusion of the Israel claim for indemnity against FMI. B. Issue Preclusion. Because FMI alleged as a defense res judicata in its generic sense, we must also determine whether all or part of the trial court's decree may be upheld on the basis of issue preclusion rather than claim preclusion. The four prerequisites for issue preclusion are well established: (1) The issue concluded must be identical; (2) The issue must have been raised and litigated in the prior action; (3) The issue must have been material and relevant to the disposition of the prior action; and (4) The determination made of the issue in the prior action must have been necessary and essential to the resulting judgment. Aid Insurance Company (Mutual) v. Chrest, 336 N.W.2d 437, (Iowa 1983); Hunter v. City of Des Moines, 300 N.W.2d 121, 123 (Iowa 1981). Issue preclusion was properly invoked by FMI and does apply here with respect to issues central to two of Israel's theories of recovery, his claim based on an active/passive negligence distinction and his theory based on reformation of the policy endorsement. We first address those two theories, then his final contention that he was entitled to a decree of indemnity on general equitable grounds.