Court Opinion

ID: 9670250
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:17:29.121056+00
Date Added: 2024-06-11T18:16:03.378188
License: Public Domain

YETKA, Justice
(dissenting).
I dissent from the majority opinion for the following reasons:
At the outset, I disagree with the majority’s determination that the necessity for finality of litigation justifies ending this litigation. The majority’s decision that this case ended with the court of appeals’ decision, which made no mention of remand, leads to a manifestly unfair result. The majority reasons that the standing issue was finally decided at the court of appeals when it held that the assignment from the Car-Del trustee was invalid. However, this ignores the possibility that plaintiffs may have a claim against Lloyds independent of the assignment. Plaintiffs’ attorney maintains that Lloyds of London encouraged Car-Del to dissolve quietly and secretly so that, unknown to plaintiffs, the 3-year statute would bar plaintiffs from collecting the deficiency judgment against Car-Del and, therefore, bar Car-Del’s claim against Lloyds of London. Such a claim stands independent of the assignment.
Public policy demands that corporations not be permitted to avoid existing liabilities merely by secretly dissolving. The importance of this policy cannot be over-emphasized. To preclude plaintiffs from litigating the issue of Car-Del’s dissolution opens the door to the possibility that a tort victim with a judgment against a corporation will not be justly compensated because the corporation was illegally dissolved. Such a *723manifestly unfair result is contrary to a public policy and is not justified by any of the concerns regarding finality of litigation. Furthermore, the theories of res ju-dicata and law of the case, which embody the notion of finality of litigation, are admittedly inapplicable in this case. Moreover, even when such doctrines are technically applicable, a court should restrain their use where a public policy would be violated or an unjust result would follow. See Garner v. Giarrusso, 571 F.2d 1330 (5th Cir.1978); Tipler v. E.I. duPont deNemours and Co., 443 F.2d 125 (6th Cir. 1971); Gollner v. Cram, 258 Minn. 8, 102 N.W.2d 521 (1960); Bertrand v. Johns-Manville Sales Corp., 529 F.Supp. 539 (D.Minn.1982).
The basis of the majority’s concern for finality of litigation in this case lies in what it believes plaintiffs should have done on appeal. I cannot agree with the majority’s finding that plaintiffs are precluded from continuing this litigation because they did not preserve alternative theories of standing. In this case, there was no prior need to litigate the alternative claim regarding Car-Del’s dissolution since plaintiffs had succeeded at the trial court on the assignment theory. The only issue appealed to the court of appeals was whether the assignment was valid. It is unfair now to say that plaintiffs should have litigated their alternative theory prior to the appeal. Once plaintiffs have prevailed in trial court, they should not be immediately required to argue and defend all alternative theories which were not at issue because of the trial court’s decision.
No other legal or policy-based reasons exist for precluding a direct suit against Lloyds of London even in the absence of an assignment from Car-Del. The original purpose in not allowing a direct suit against an insurance company was to permit a jury trial on the merits between the original parties without knowledge of insurance coverage. Here, there was no need for such protection because the original lawsuit was brought between individuals, and a verdict of over $250,000 was secured. Then and only then, it was determined separately that Lloyds of London had not made a good-faith defense. They had an opportunity to settle the case within the policy limits and did not do so. Why should Lloyds now have the benefit of our common law rule that one can’t sue an insurance company directly? In this case, I would hold that the plaintiffs may sue Lloyds of London directly to recover the deficient balance.
Finally, I disagree with the majority because it writes into the 3-year corporate dissolution statute a statute of limitations. The very purpose of the statute of limitations is to prevent stale claims from being brought, where witnesses are dead or have moved away, and evidence is hard to discover. The courts have always looked with disfavor on extending statutes of limitations beyond the original intent. Lloyds of London is harmed in no way because of any delay in this case. They were notified of the original claim when brought and helped defend against it all along. The case has been fully litigated on its merits against its original insured and, in a separate lawsuit, a determination was made that Lloyds of London had defended in bad faith. Thus, there can be no argument that Lloyds has ever been prejudiced.
In sum, the need for finality in litigation does not outweigh the manifest injustice that would result if plaintiffs were precluded from continuing this litigation. I would permit plaintiffs to show that the dissolution was in derogation of the statute and beyond its intent and scope. Further, I would permit them to show that the dissolution, which, in effect, was a substitute for bankruptcy, effectuated a result obviously not within the original intent of the statute. Finally, plaintiffs should be allowed to proceed either in the manner they sought to proceed here or in a separate, direct lawsuit against Lloyds of London.