Opinion ID: 1774526
Heading Depth: 2
Heading Rank: 3

Heading: Full and Fair Litigation

Text: Kenneco argues that the federal court's findings should not be afforded preclusive effect because of the alignment of the parties in the federal action. Kenneco asserts that it had no real incentive in the federal action to develop testimony against J & H, because J & H was participating on Kenneco's behalf. Thus, according to Kenneco, there was no full and fair litigation of issues relating to J & H's conduct, and the alignment of the parties created a situation in which J & H's conduct was not rigorously considered. J & H responds that the alignment of the parties should not negate the collateral estoppel effect of the federal court's findings. J & H admits that it assisted Kenneco in asserting its claim against the London underwriters, and even testified on Kenneco's behalf in federal court as to how the claim should be adjusted. However, J & H claims it did not align itself with Kenneco concerning the events of the November 30 meeting. J & H asserts that the issue of what occurred at the meeting and what Anderson said or did was drawn through the conflicting testimony of Anderson and Brown and through the dispute over that issue between Kenneco and the London underwriters. We agree with J & H and hold that J & H's involvement in the prior action as a witness on behalf of Kenneco does not extinguish the collateral estoppel effect of the federal court's findings. There would be no question as to the preclusive effect of those findings had J & H not participated in the prior action. Kenneco's argument that it had no incentive to litigate against J & H fails because that is not the test: the proper inquiry is whether Kenneco had incentive to litigate the issue of Anderson's representations regarding lost profits coverage at the November 30 meeting. See Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 802 (Tex.1994) (When the issue is properly identified, it becomes clear that this issue was fully and fairly litigated in the federal action.). Kenneco had every incentive to prove that Anderson made the alleged representations concerning increased value coverage; Kenneco's recovery for lost profits in the federal coverage suit depended upon such a finding. What Anderson said regarding lost profits coverage was fully aired in the federal courts through the testimony of Brown and Anderson and through the conflicting positions of Kenneco and the London underwriters regarding those representations. See Armada Supply, 665 F.Supp. at 1050 (London underwriters ... den[y] that Johnson & Higgins purported to make such an agreement.). Thus, the issue of what Anderson said at the November 30 meeting was fully and fairly litigated in the federal courts. Kenneco also argues that collateral estoppel should not apply because the procedural opportunity of a jury trial was unavailable in the New York action, citing Federal Rule of Civil Procedure 38(e). The mere fact that Kenneco could not avail itself of this opportunity does not, in and of itself, preclude an application of defensive collateral estoppel. Further, the United States Supreme Court has previously rejected the position that collateral estoppel violates a party's Seventh Amendment right to a trial by jury. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 333-37, 99 S.Ct. 645, 652-55, 58 L.Ed.2d 552 (1979). While the question remains open as a matter of Texas constitutional law, see Sysco Food Servs., 890 S.W.2d at 801 n. 7, Kenneco has not raised any argument under the Texas Constitution in this Court, and therefore we will not consider the question. See Tilton v. Marshall, 925 S.W.2d 672, 677 n. 6 (Tex.1996).