Opinion ID: 1817011
Heading Depth: 1
Heading Rank: 1

Heading: Whether the Judgment by Confession Gives Rise to Issue Preclusion.

Text: We first consider whether the judgment by confession may be considered to have conclusively established the amount of the estate's loss on the basis of issue preclusion. As appellant points out, comment e of Restatement (Second) Judgments section 27 (1982) provides as follows: In the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated. Therefore, the rule of this Section [dealing with issue preclusion] does not apply with respect to any issue in a subsequent action. (Emphasis added.) Appellees respond that this is not the law of Iowa and rely on three decisions of this court to establish that proposition. In State ex rel. Casas v. Fellmer, 521 N.W.2d 738 (Iowa 1994), this court dealt with the effect of a prior consent judgment in a paternity action. That judgment had declared that Fellmer was not the father of Casas's child. In the case that came before this court, the state, acting on behalf of Casas, sought to recover child support from Fellmer. We held that this was precluded by the judgment in a paternity action. Although we discuss the doctrine of issue preclusion in Fellmer, the dispositive principle governing the decision was one of claim preclusion. The status of Fellmer as the father of the child was the claim made in the earlier action. Under claim preclusion law, consent judgments are binding on the parties thereto with respect to the subject of the judgment consented to. They are also binding on parties claiming through and on behalf of the prior litigant, as was the state in the Fellmer case. In Fournier v. Illinois Casualty Co., 391 N.W.2d 258 (Iowa 1986), we approved the following rule from Restatement (Second) Judgments concerning the dimension of a claim: When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger and bar, . . . the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. Fournier, 391 N.W.2d at 260 (quoting Restatement (Second) Judgments § 24 (1982)). The attempt to recover child support in the subsequent litigation in Fellmer was part of a series of connected transactions linked to the initial paternity determination. Under the doctrine of claim preclusion, as opposed to issue preclusion, a consent judgment in the paternity action was binding on Casas and the state, which was claiming through Casas. In the present case, the administrator is not claiming through the Sextons with respect to the sums sought from appellees. The claim is based on a contractual obligation of the appellees running directly to the administrator's decedent. Another case that appellees contend supports the district court's ruling is City of Chariton v. J.C. Blunk Construction Co., 253 Iowa 805, 112 N.W.2d 829 (1962). In that case a bonding attorney had suggested to the city officials that the expenses of contracting for a particular public improvement might not qualify for financing through general obligation bonds. Based on this advice, the city and its contractor became parties to a friendly lawsuit in which, after the work was performed, the contractor was granted a judgment against the city for an agreed amount. The payment of the judgment was financed through the issuance of municipal judgment bonds. Later, the city sought to recover some of the contract payments on the theory that the workmanship was defective. This court held that under principles of claim preclusion the adequacy of the performance had been determined by the consent judgment. City of Chariton, 253 Iowa at 813, 112 N.W.2d at 833. This decision does not aid the appellees who, as nonprivies to the judgment by confession against the Sextons, must rely on issue preclusion principles rather than claim preclusion principles. See Penn v. Iowa State Bd. of Regents, 577 N.W.2d 393 (Iowa 1998); Riley v. Maloney, 499 N.W.2d 18, 20 (Iowa 1993). Another case relied on by the appellees is actually not an issue preclusion decision. The decision in Hughes v. Burlington Northern Railroad, 545 N.W.2d 318 (Iowa 1996), had to do with whether the stated amount in a judgment by confession established the total amount owed, or whether the plaintiff was entitled to have statutory prejudgment interest added to the judgment. We interpreted the judgment as including all amounts owed as of the date it was entered and thus subject to only postjudgment interest. The effect given to the judgment in Hughes was between the parties thereto in the same case in which it was entered and thus no principles of res judicata were involved. Based on the conclusions reached in the prior discussion, we are convinced that, although the judgment by confession is binding between the parties and their privies under principles of claim preclusion, it does not avail USF & G or Iowa Mutual of a viable claim of issue preclusion in the present litigation. An essential element of issue preclusion is absent, i.e., the requirement that the issue actually be litigated in the prior litigation. See Penn, 577 N.W.2d at 398; Brown v. Kassouf, 558 N.W.2d 161, 163 (Iowa 1997); Hunter v. City of Des Moines, 300 N.W.2d 121, 126 (Iowa 1981).