Court Opinion

ID: 9734060
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:24:12.476174+00
Date Added: 2024-06-11T18:26:45.334481
License: Public Domain

Larrow, J.
(dissenting). I cannot subscribe to affirmance of the judgment below.
Were the matter urged before us on appeal, the action of the trial court in taking judicial notice, over objection, of the record in the prior litigation would require reversal, since that action was between different parties. Hanley v. United Steel Workers, 119 Vt. 187, 122 A.2d 872 (1956). Not being briefed, however, this error is waived. Appeal of Fowler, 130 Vt. 176, 288 A.2d 463 (1973). Thus, for present purposes, the material facts dealt with in the majority opinion are properly for our consideration.
To these facts, the majority would apply the general rule that an insurer who refuses to defend is bound by issues actually or necessarily litigated in the first trial. Seemingly, however, recognition is accorded to the exception, urged by appellant, that this rule does' not apply to factual situations where, if the insurer protects its own interests in the first action, its argument would be prejudicial to the insured. The exception has been succinctly stated:
*223The judgment should operate as an estoppel only where the interests of the insurer and insured in defending the original action are identical — not where there is a conflict of interests. Ferguson v. Birmingham Fire Ins. Co., 254 Ore. 496, 460 P.2d 342, 349 (1969).
See also, to the same general effect, Farm Bureau Mutual Automobile Ins. Co. v. Hammer, 177 F.2d 793 (4th Cir. 1949).
The exception is a logical one, and, as the majority points out, is commonly confronted where an alleged personal injury may be either negligent or intentional, with insurance coverage not afforded under an intentional injury exclusion.
It is with the statement of the majority that the inapplicability of this exception to the instant case is “obvious” that I must respectfully disagree. 29 V.S.A. § 1403 is a somewhat unique statute, in that the purchase of insurance against a risk formerly precluded by the defense of sovereign immunity pro tanto destroys the defense. We are pointed to no case precisely in point under a similar statute, so that our decision here must rest largely on principle and analogy. My analysis of the course of this litigation would indicate that the interests of the insured and the insurer, at the first trial, were not identical, as held, but diverse.
It is true, so far as liability to claimant Wells is concerned, that the insured village is equally protected whether or not there is coverage. If there is, Union Mutual “foots the bill.” If there is not, sovereign immunity, at least until now, precludes liability in this jurisdiction. To this extent, the village would be impartial in its conduct of the original defense. Even if this impartiality were total, however, it falls far short of advocacy of the insurer’s position that could be said to be a meaningful presentation justifying binding the insurer by the result. The reference in the majority opinion to the possibility of increased rates upon policy renewal is completely outside the evidence; there is no evidence whatever of either indicated renewal or of rates set on the basis of an insured’s past experience. To the contrary, there is an unconsidered element which makes the position of the parties clearly adverse. While it is true that the non-existence of coverage affords to the village the defense of sovereign immunity, it still leaves it with the cost and expense of defending the liti*224gation. On. the other hand, if there is coverage, the insurer is liable for all those costs and expenses, so that the village would be totally harmless, Lord & Taylor, Inc. v. Yale & Towne Mfg. Co., 230 N.Y. 132, 129 N.E. 346 (1920). Coverage is distinctly to the advantage of the village, rather than absence of coverage. Properly advised, as we must assume it was, the village would be attempting to show coverage, not its absence. And, indeed, the record of the previous appeal demonstrates this point. Briefing assumption of risk, contributory negligence, and measure of damage, the insured gave no attention at all to the question of coverage. Wells v. Village of Orleans, Inc., 132 Vt. 216, 315 A.2d 463 (1974). In light of the complexity of this question, ignoring it completely cannot be said to be a fair representation of the insurer’s viewpoint, such as would justify it being bound under the doctrine of collateral estoppel.
Much of the majority opinion deals with a question which in my view we do not here reach, the ultimate liability or non-liability of the insurer to the village. The findings of fact of which the trial court took judicial notice can only be the basis for deciding that issue if they are binding upon the insurer under the doctrine of collateral estoppel. The majority opinion involves two steps. It first makes these findings binding upon the insurer because of an asserted lack of conflict of interest in the first litigation, and then predicates liability upon the facts so found. I do not address this dissent to the second question, because I feel it is not properly reached. The ultimate re-: suit of this litigation could well be the imposition of liability on the insurer. It could well be the probable result if the trial court in this action agrees with the view of the evidence taken by the court in the original action. My sole contention is that the insurer is entitled to have those facts proved in an action to which it is a party and in which it can effectively defend its position without prejudice to the position of the insured vis-avis the claimant. It could not do this in the original action because the position of the parties was adverse.
Intimating without deciding, as the majority opinion seems to do, that the defendant here should have resorted to an action for declaratory judgment, and that its failure so to do militates against its present contentions, imposes upon a litigant a burden which is unjustified. There is nothing mandatory about declaratory judgment procedures. And the remedy *225afforded thereunder was equally available to the plaintiff village.
I cannot conceive that substantially the same Court which held res adjudicada to be inapplicable in Hill v. Grandey, 132 Vt. 460, 321 A.2d 28 (1974), with all essential facts found and all essential parties joined in the first action, can hold in the situation here presented that the issue of coverage was truly “litigated”, when both parties to the original action were basically interested in establishing it, and no one presented the contrary view.
I would reverse the judgment below and remand the cause for trial, to the end that the defendant may be afforded the day in court for which the majority opinion expresses, but does not evidence, appropriate concern.