Opinion ID: 1482780
Heading Depth: 1
Heading Rank: 1

Heading: The Action in the Superior Court

Text: After that settlement was made, Air-Lite brought the instant action in the Superior Court against Gilbane, O'Rourke and Homans, seeking contribution for the settlement payment made by it. Maguire brought a similar action. The defendants O'Rourke and Homans filed motions for summary judgment against Air-Lite and Maguire. The motions were heard before a justice of the Superior Court. In her decision granting defendants' motions, she held that questions concerning the legal effect of Judge Aldrich's decision and plaintiffs' (Air-Lite and Maguire) settlement with New Amsterdam and how these elements affect plaintiffs' present claim for recovery, are obviously and exclusively questions of law. She therefore concluded that it was proper to entertain defendants' motions for summary judgment. The trial justice agreed with Judge Aldrich's interpretation of our contribution among joint tortfeasors act and held that § 10-6-8 [3] of the act, entitled Liability to contribution of tortfeasor released by injured person, when considered with Judge Aldrich's opinion, provided a sound and compelling legal basis for dismissing plaintiffs' claims. She based her conclusion on the fact that defendants, Homans and O'Rourke, met the description of a released joint tortfeasor as set forth in § 10-6-8 and should not, therefore, be liable for contribution to plaintiffs, designated in § 10-6-8 as another joint tortfeasor. The trial justice next discussed the three conditions which she said defendants must have satisfied in order to be relieved of the liability of contribution under § 10-6-8. She stated that the first two of these conditions are that (1) defendants must have obtained a release from New Amsterdam (the injured party), and (2) they must have obtained it before plaintiffs (Maguire and Air-Lite) were entitled to secure a money judgment for contribution. Citing Judge Aldrich's decision as authority, the trial justice construed New Amsterdam's decision not to appeal Judge Day's summary dismissal of New Amsterdam's direct claims against O'Rourke and Homans as a release of O'Rourke and Homans by New Amsterdam. Because this release was given before plaintiffs secured the right to a money judgment for contribution, as provided in § 10-6-4, [4] the trial justice held that the first two conditions of § 10-6-8 were satisfied. The trial justice next discussed the third, condition contained in § 10-6-8, pointing out that it required that the release provide for a reduction, to the extent of the pro rata share of the released tortfeasor, of the injured person's damages recoverable against all other tortfeasors. After pointing out that initially defendants' release from liability to New Amsterdam was not conditioned upon such a pro rata reduction, she held that Judge Aldrich's opinion imposing a set-off mechanism, which was induced by the fact that defendants had already been released and that New Amsterdam would have to insure defendants for contribution, achieved the exact effect contemplated by the pro rata reduction in § 10-6-8. She referred specifically to Judge Aldrich's ruling that To avoid circuity of action, we hold that plaintiff cannot now recover against appellants to the extent that appellants could, in turn, compel contribution from appellees. New Amsterdam Cas. Co. v. Holmes, supra at 1235. She then pointed out that the limitation placed upon New Amsterdam's recovery constituted a reduction to the extent of O'Rourke's and Homans' pro rata share of the damages to New Amsterdam; that as a result of Judge Aldrich's decision, New Amsterdam realized that it could not recover a full measure of damages from Maguire and Air-Lite, if it returned to the District Court, and would be limited by an amount defined as defendants' pro rata share; and that plaintiffs also realized the importance of the limitation placed upon New Amsterdam's recovery. She concluded that the settlement between New Amsterdam and plaintiffs represented their decision to avoid costly litigation and to exercise their right and privilege to arrive at their own evaluation of the pro rata shares involved, instead of returning to the District Court for a judicial determination of the amounts involved; that the parties were aware that Judge Aldrich's decision was a final, conclusive and enforceable adjudication of what New Amsterdam could recover from plaintiffs; and that the fact that the exact amounts involved were not judicially determined presented no problem and created no question of fact necessitating further litigation, since New Amsterdam and plaintiffs were free to assign their own estimate of the shares of liability involved and did just that in settling. She held that to allow plaintiffs the opportunity to recover from defendants at this point would violate the spirit of § 10-6-8, by giving them the chance to obtain a double pro rata reduction. The trial justice also gave the following additional reasons for dismissing plaintiffs' present claims against defendants O'Rourke and Homans: (1) to allow plaintiffs in court would violate Judge Aldrich's attempt to avoid circuity of action; (2) Section 10-6-5 [5] presents a serious question as to plaintiffs' right and standing to seek contribution from defendants, since defendants were released from liability to New Amsterdam by a judicial ruling, and, therefore, plaintiffs' settlement with New Amsterdam could not have released the already released defendants; and (3) to allow plaintiffs in court now would render the federal court proceedings of no value and would allow plaintiffs to litigate precisely that which they should have litigated back in the federal court after Judge Aldrich's opinion. Finally, the trial justice found no merit in plaintiffs' claim for indemnification for the following reasons: (1) defendants took no part in and were not released by the settlement between plaintiffs and New Amsterdam; (2) Judge Day decided that plaintiffs had no right to indemnification and his decision had become final; and (3) Judge Aldrich's opinion recognized only plaintiffs' right to contribution from defendants and did not recognize a right to indemnification. The plaintiffs offer many arguments in their briefs most of which attack the validity of the trial justice's finding of compliance with the requisites of § 10-6-8 relieving defendants from liability for contribution. We do not consider these here because we believe that the doctrine of res judicata is dispositive of the entire matter. That defense was asserted by various defendants at various stages of the pleadings and in their motions for summary judgment but was apparently not considered by the trial justice in her deliberations on those motions. The fact that the affirmative defense of res judicata was not raised by defendant O'Rourke in its answers or amended answers to the complaints filed by Air-Lite and Maguire poses no impediment to our finding that the doctrine applies to its case as well as to that of co-defendant Homans. Affirmative defenses may be established upon motion for summary judgment when the record reveals an undisputed set of facts upon which the movant is entitled to judgment as a matter of law. Suckow Borax Mines Consol., Inc. v. Borax Consol., Ltd., 185 F.2d 196, 205 (9th Cir. 1950). Res judicata is normally pleaded as an affirmative defense under Super.R.Civ.P. 8(c) but where no substantive rights are in jeopardy the manner in which the defense is raised has little or no import. 348 Bloomfield Avenue Corp. v. Montclair Mfg. Co., 90 F.Supp. 1020, 1021 (D.N.J.1950). In the present case, Homans' motions for summary judgment and memorandum in support thereof assert the defense of res judicata. O'Rourke, in its memorandum supporting its own Rule 56 motions, expressly incorporated the argument of codefendant Homans in this regard. Therefore, the purpose of Rule 8(c) to avoid unfair surprise to a party whose claim is subject to affirmative defense is herein satisfied. Every party was fairly apprised of the possibility that the claim was subject to avoidance by virtue of the final judgments entered in the federal action. We may therefore proceed to consider the application of the doctrine in the instant case. In order for res judicata to apply to bar a cause of action, there must be (1) identity of parties, (2) identity of issues and (3) finality of judgment. DiSaia v. Capital Industries, Inc., 113 R.I. 292, 298, 320 A.2d 604, 607 (1974). The doctrine's effect is to bar relitigation of all issues that were tried or might have been tried in the original suit by any court of competent jurisdiction. Providence Teachers Union, Local 958 v. McGovern, 113 R.I. 169, 172, 319 A.2d 358, 361 (1974). Regarding the status of matters decided by summary judgment, it is accepted that such matters are final and appealable and are res judicata in a subsequent action. 3 Barron & Holtzoff, Federal Practice & Procedure § 1246 (Wright ed. 1958); 1 Kent, R.I.Civ. Prac. § 56.12 (1969). One noted authority states: A summary judgment motion goes to the merits of the case and, because it does not simply raise a matter in abatement, a granted motion operates to merge or bar the cause of action for purposes of res judicata. 10 Wright & Miller, Federal Practice & Procedure § 2712 at 386 (1973). Thus, in a case where the issues were disposed of by summary judgment, a Rule 56 motion will be granted in a later proceeding wherein the same issues are raised. That is, the proper vehicle for disposing of an action barred by res judicata is the issuance of a summary judgment. Id. § 2735. Turning our attention to the present case, it is obvious that there is the requisite identity of parties between this action and the cross-claims disposed of by Judge Day's orders. It is equally clear from our statement above regarding the finality and appealability of summary judgments generally, that the summary judgments at issue here fulfill the doctrine's requirement of finality. Air-Lite, however, protests that res judicata cannot be said to apply here because the present cause of action did not arise until the settlement between themselves and New Amsterdam, an event which post dated the federal judgment by 12 months. The thrust of the argument is that the issues raised by the settlement are different from those raised by the cross-claims; in short, that there is lacking the requisite identity of issues. We find this proposition difficult to accept. If Air-Lite's and Maguire's causes of action against Homans and O'Rourke first arose, as the present argument implies, only after the settlement with New Amsterdam, we are at a complete loss to understand exactly what these plaintiffs sought to gain by their federal cross-claims. Were they not pursuing the very same relief that they pursue here, to wit, indemnity, or, in the alternative, contribution? Do not both cases, therefore, raise identical issues? The plaintiffs may indeed be correct in saying that Judge Aldrich's opinion admits the potential liability of these defendants under the joint tortfeasors act. The plaintiffs' argument, however, fails to account for the fact that, for policy reasons, they were stripped of their ability to sue on that potential liability. The circuit court's opinion held that any contribution to which planitiffs are entitled comes to them derivatively and in the form of a set-off through the cause of action that New Amsterdam brought against them in federal court. That cause of action was extinguished by the settlement and release. The plaintiffs were deprived of all right to sue defendants directly for contribution by virtue of the federal decisions. Therefore all matters that were tried or that could have been tried in the dispute among these parties have been finally resolved by the issuance of the summary judgments on the cross-claims and by the settlement of the primary cause of action. We need not rule on the correctness of any of the federal adjudications for it is settled law in this state that for an issue to be res judicata, it is not necessary that the prior judgment be correct. A judgment may be erroneous in law, but if it becomes final it is still binding and conclusive as between the parties upon the question. Lopes v. Mallory, 108 R.I. 694, 698, 279 A. 2d 450, 452 (1971). This doctrine of repose rests not upon the correctness of judgments but upon the public policy favoring the finality of judgments. See Reed v. Allen, 286 U.S. 191, 199-200, 52 S.Ct. 532, 533-34, 76 L.Ed. 1054, 1057 (1932); Ballard v. First Nat'l Bank, 259 F.2d 681, 683-84 (5th Cir. 1958). The plaintiffs should not be heard to complain that this works an injustice upon them because we must presume that they sought to preserve their own best interests when they entered into the settlement negotiations with New Amsterdam. One of Judge Aldrich's primary reasons for reaching the result he reached was that he sought to avoid what he called circuity of actionthat is, to avoid the situation whereby Homans and O'Rourke, if subjected to an adverse verdict, would turn again and sue New Amsterdam as their insurer. To accomplish this he sustained the dismissal of the cross-claims against Homans and O'Rourke and limited New Amsterdam's possible recovery against Air-Lite and Maguire to the latter parties' pro rata shares of the damages assumed by New Amsterdam as subrogee of the original claim. Air-Lite and Maguire entered into their negotiations with New Amsterdam with full knowledge of the circuit court opinion and, absent any finding or allegation to the contrary, we must assume that these parties sought and obtained a release, the consideration for which would not exceed the ceiling that had been placed upon their liability. These plaintiffs have not here or in the proceedings below urged that the release they obtained was tainted by fraud or illegality. All that is apparent from the record before us is that plaintiffs opted to bypass their judicial remedy in favor of the more expeditious route of settlement and release. It is apparent that their primary concern was not the avoidance of the headaches of litigation since the current litigation was instituted entirely separately from the federal action and has, no doubt, caused even greater headaches than a trial on remand in the federal court would have caused. We hold, therefore, that the final judgment in the federal court is res judicata in the present case. Since summary judgment in the Superior Court would have been the proper vehicle for effectuating the doctrine, Wright & Miller, supra § 2735, we will allow the summary judgment issued therein to stand although it was in fact issued on the strength of a somewhat different line of reasoning. The plaintiffs' appeals are denied and dismissed, the judgments appealed from are affirmed, and the cases are remitted to the Superior Court.