Opinion ID: 2543734
Heading Depth: 4
Heading Rank: 2

Heading: Miller II Order of Dismissal

Text: ¶ 55 We next turn our attention to whether the Miller II district court deprived the Millers of the opportunity to have their day in court on the extra-contractual claims. Whether the Miller II court denied the Millers the opportunity to have their day in court depends on whether that court properly dismissed their claims.
¶ 56 On July 15, 1998, the USAA defendants moved to dismiss the extra-contractual claims alleged in Miller II on claim preclusion grounds. The Miller II district court accepted this argument, and thus, dismissed the extra-contractual claims, ruling that the doctrine of res judicata precluded those claims. Specifically, the district court reasoned: The doctrine of res judicata is clearly applicable to [the Millers' extra-contractual claims brought here and] are effectively the same as [the Miller I extra-contractual claims]. Dismissal in that case constituted a final judgement on the merits. As such, the parties may not again raise those issues in this law suit.... Whether the Miller II district court unconstitutionally denied the Millers the opportunity to have their day in court on the extra-contractual claims depends on whether the district court properly dismissed those claims on res judicata grounds. ¶ 57 The doctrine of res judicata serves the important policy of preventing previously litigated issues from being relitigated. Salt Lake City v. Silver Fork Pipeline Corp., 913 P.2d 731, 733 (Utah 1995). Res judicata encompasses two distinct doctrines: claim preclusion and issue preclusion. Macris & Assocs., Inc. v. Neways, Inc., 2000 UT 93, ¶ 19, 16 P.3d 1214. In this case, the Miller II court dismissed based on the doctrine of claim preclusion. ¶ 58 Generally, claim preclusion bars a party from prosecuting in a subsequent action a claim that has been fully litigated previously. Culbertson v. Bd. of County Comm'rs, 2001 UT 108, ¶ 13, 44 P.3d 642; see also Macris & Assocs., 2000 UT 93 at ¶ 19, 16 P.3d 1214. The party moving a court to dismiss on claim preclusion grounds bears the burden of establishing three elements, Macris & Assocs., 2000 UT 93 at ¶ 20, 16 P.3d 1214 which are: First, both cases must involve the same parties or their privies. Second, the claim that is alleged to be barred must have been presented in the first suit or must be one that could and should have been raised in the first action. Third, the first suit must have resulted in a final judgment on the merits.  Id. (emphasis added) (quoting Madsen v. Borthick, 769 P.2d 245, 247 (Utah 1988)); see also Culbertson, 2001 UT 108 at ¶ 13, 44 P.3d 642. All three elements must be established for claim preclusion to apply. See Madsen, 769 P.2d at 247. ¶ 59 According to the third element, [a]n adjudication upon the merits is ... required [to establish] claim preclusion. Beaver County v. Qwest, Inc., 2001 UT 81, ¶ 20, 31 P.3d 1147. We find this element to be dispositive as to the applicability of res judicata in this case. The Miller II district court, applying the doctrine of res judicata, dismissed the extra-contractual claims because those same claims had been dismissed in the August 21, 1997, order of Miller I as a final judgment on the merits. However, we conclude that the trial court erred in ruling that res judicata barred the extra-contractual claims for the ensuing reasons. ¶ 60 First, the August 21, 1997, order was not final. Unless an order or judgment disposes of all the parties and all the claims on the merits, that order is not a final order or judgment because claims are left pending. Bradbury v. Valencia, 2000 UT 50, ¶¶ 9 & 11, 5 P.3d 649; Gen. Motors Acceptance Corp. v. Martinez, 712 P.2d 243, 244 (Utah 1985). Furthermore, as we stated above, an order compelling appraisal is not a final judgment. Although the August 21, 1997, order dismissed all of the Millers' claims, including the extra-contractual claims, it was not a final order because it merely ordered that all of the Millers' claims be submitted to appraisal. [8] The order left the claims pending, viable, and outstanding. ¶ 61 Next, the August 21, 1997, order was not [a]n adjudication upon the merits. Beaver County, 2001 UT 81 at ¶ 20, 31 P.3d 1147. Rule 41(b) of the Utah Rules of Civil Procedure comprehensively define[s] a dismissal on the merits. Madsen, 769 P.2d at 248; see also Beaver County, 2001 UT 81 at ¶¶ 19-20, 31 P.3d 1147. Rule 41(b) provides in pertinent part: [A] dismissal ..., other than a dismissal for lack of jurisdiction or for improper venue or for lack of an indispensable party, operates as an adjudication upon the merits. Utah R. Civ. P. 41(b) (emphasis added). Accordingly, we have held that under rule 41(b), a dismissal for lack of jurisdiction does not result in an adjudication on the merits. Beaver County, 2001 UT 81 at ¶ 19, 31 P.3d 1147. ¶ 62 In its August 21, 1997, order, the Miller I district court never addressed the merits of the allegations in the complaint, but simply dismissed the Millers' claims because the parties [were] bound by contract to settle the dispute in this case by appraisal. The district court dismissed Miller I on the assumption that it lacked jurisdiction to hear the Millers' claims, i.e., on the assumption that the insurance contract vested the appraisal panel with jurisdiction to hear the claims and that the contract reciprocally divested the district court of jurisdiction until the completion of the appraisal process. Accordingly, because the district court dismissed for lack of jurisdiction, we conclude that the extra-contractual claims were never dismissed on the merits. See, e.g., Beaver County, 2001 UT 81 at ¶ 19, 34 P.3d 1147. ¶ 63 Therefore, the USAA defendants never established the third element of claim preclusion. Inasmuch as the USAA defendants never established claim preclusion, the Miller II district court should not have dismissed the extra-contractual claims and, in doing so, denied the Millers the opportunity to have their day in court on the merits of those claims. [9]
¶ 64 The district court declined to address the scope of the appraisal clause, vesting the appraisal panel with authority to determine the scope of the clause in its discretion. The determination of the scope of the appraisal clause is a question of law for determination by the district court because it is a matter of contract interpretation. See Pac. Dev., L.C. v. Orton, 2001 UT 36, ¶ 13, 23 P.3d 1035; see also Caldwell v. Ford, Bacon & Davis Utah, Inc., 777 P.2d 483, 486 (Utah 1989). The district court erred in devolving the determination of the scope of appraisal to the panel. In doing so, the district court improperly abdicated its duty to interpret the appraisal clause and determine the scope of appraisal. See Portland Gen. Elec. Co. v. U.S. Bank Trust Nat'l Assoc., 218 F.3d 1085, 1090 (9th Cir.2000); Lundy v. Farmers Ins. Exch., 322 Ill.App.3d 214, 255 Ill.Dec. 733, 750 N.E.2d 314, 318 (2001).