Court Opinion

ID: 2964282
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:23:10.078406+00
Date Added: 2024-06-11T15:01:59.415031
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USCA1 Opinion

	

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 95-2197

                                    DARYL E. PORN,

                                Plaintiff, Appellant,

                                          v.

                      NATIONAL GRANGE MUTUAL INSURANCE COMPANY,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                     [Hon. D. Brock Hornby, U.S. District Judge]
                                            ___________________

                                 ____________________

                                        Before

                               Selya, Stahl, and Lynch,
                                   Circuit Judges.
                                   ______________

                                 ____________________

            Catherine  R.  Connors,  with whom  Scott  T.  Maker  and  Pierce,
            ______________________              ________________       _______
        Atwood,  Scribner,  Allen,  Smith  &  Lancaster,  were  on  brief  for
        _______________________________________________
        appellant.
            Constance L. Epstein,  with whom  John R.  FitzGerald, Matthew  D.
            ____________________              ___________________  ___________
        Gilmond,  Howard,  Kohn,  Sprague &  Fitzgerald,  Harold  J. Friedman,
        _______   _____________________________________   ___________________
        Elizabeth A. Germani, Jonathan M. Dunitz, and Friedman & Babcock, were
        ____________________  __________________      __________________
        on brief for appellee.

                                _____________________

                                   August 23, 1996
                                _____________________

                      STAHL, Circuit Judge.  Having successfully sued his
                      STAHL, Circuit Judge.
                             _____________

            insurer, National Grange Mutual Insurance Company  ("National

            Grange"),  six months  earlier  for  breach  of  contract  in

            refusing  to pay his claim for underinsured motorist benefits

            incurred during a July 1990 car accident, plaintiff-appellant

            Daryl  E. Porn  brought  this  diversity  action  in  Maine's

            federal  district  court   against  National  Grange  seeking

            additional  damages  for  its   alleged  mishandling  of  his

            underinsured  motorist  claim.   The  district  court granted

            summary judgment  in favor  of National Grange  based on  the

            doctrines of  collateral estoppel (issue  preclusion) and res

            judicata  (claim  preclusion),   concluding  that  an   issue

            underlying  one of  Porn's  claims had  been  decided in  the

            earlier  proceeding and that all of  Porn's claims could have

            been  raised  therein.   Porn  appeals  the  district court's

            summary judgment order.  Finding no error, we affirm.

                                          I.
                                          I.
                                          __

                            Background & Prior Proceedings
                            Background & Prior Proceedings
                            ______________________________

                      On July 17, 1990, Porn, a Connecticut resident, was

            involved in an  automobile accident in Portland,  Maine, when

            motorist  Lori  Willoughby  sped  through  a  stop  sign  and

            broadsided  his  vehicle.     Because  his  damages  exceeded

            Willoughby's  $20,000  policy  limit, Porn  made  a  claim to

            National Grange under his automobile policy  seeking recovery

            from  the underinsured  motorist  indorsement to  the policy.

                                         -2-
                                          2

            For  reasons  not  apparent in  the  record,  National Grange

            refused to pay the claim.  

                      Disgruntled by this refusal, Porn wrote to National

            Grange accusing  it of  bad faith in  handling his  claim and

            threatening legal action.  Porn  sent copies of his letter to

            the insurance commissioners of Connecticut and Massachusetts.

            National  Grange,  unimpressed,  remained  steadfast  in  its

            refusal to pay, and in November 1993, Porn filed suit against

            National  Grange in Maine's federal district court for breach

            of the insurance contract ("first action").

                      Because Porn's policy with National Grange required

            a finding of legal liability  on the part of the underinsured

            motorist as a condition precedent to the payment of benefits,

            the two-day trial before the magistrate judge1 focused on the

            question of Willoughby's  negligence and Porn's  contributory

            negligence.   Following the  completion of the  evidence, the

            magistrate judge entered judgment as a matter of law for Porn

            on  the  issue  of  contributory  negligence,  and  the  jury

            returned  a  verdict  for  Porn,  finding  that  Willoughby's

            negligence had caused  him $400,000 worth of  damages.  After

            reducing  the   jury's  award  to  reflect   Porn's  $300,000

            underinsured motorist policy  limit and appropriate set-offs,

            the magistrate judge entered judgment for Porn in  the amount

                                
            ____________________

            1.  Under Fed.  R. Civ. P.  73, the parties consented  to the
            magistrate judge, rather than the district  judge, conducting
            the jury trial.

                                         -3-
                                          3

            of  $255,314.40.  The  magistrate judge denied  Porn's motion

            for prejudgment interest, finding that while Maine law allows

            prejudgment interest in excess of the policy limit where  the

            insurer  acted  in  bad faith  and  needlessly  prolonged the

            litigation,  Porn  had presented  no  evidence that  National

            Grange exhibited such behavior.

                      Six  months  later,   Porn  commenced  this  action

            against  National Grange  in Maine's  federal district  court

            ("second  action").   This time  Porn  alleged that  National

            Grange's conduct in handling his underinsured  motorist claim

            constituted breach of the covenant of good faith, intentional

            infliction  of  emotional distress,  negligent  infliction of

            emotional distress,  and violations of the Connecticut Unfair

            Insurance  Practices Act  and  the  Connecticut Unfair  Trade

            Practices Act.   National Grange moved for  summary judgment,

            arguing that the judgment in the first  action precluded Porn

            from bringing the second action.  The district court accepted

            that  argument and  granted  summary  judgment  in  favor  of

            National Grange on the grounds  that (1) one aspect of Porn's

            bad-faith claim was barred by issue preclusion and (2) all of

            Porn's claims were barred by claim preclusion.  

                      In reaching  its first holding, the  district court

            explained that the  magistrate judge's decision not  to award

            Porn prejudgment interest  was based in  part on his  finding

            that Porn had presented no evidence to  suggest that National

                                         -4-
                                          4

            Grange  acted in  bad  faith  and  needlessly  prolonged  the

            litigation.    Accordingly,  the  court  concluded  that  the

            question  of National Grange's  alleged bad-faith  conduct in

            litigating the  first action  was raised  and decided  in the

            first  action, and, therefore, to the extent Porn's bad-faith

            claim  involved National  Grange's conduct  during  the first

            action, it was barred by issue preclusion.

                      In  reaching its broader  holding that all  five of

            Porn's claims were  barred by claim preclusion,  the district

            court reasoned that once Porn chose to bring the first action

            against  National Grange  for  breach  of  contract,  he  was

            required to raise  all his claims arising from  the breach or

            else  forfeit the  right to  do so.   Because  it  found that

            Porn's  five  tort  and statutory  claims,  like  the earlier

            breach  of   contract  claim,   involved  National   Grange's

            obligations arising under the insurance  policy, the district

            court  concluded that  they should  have been brought  in the

            first  action and therefore  were barred by  claim preclusion

            from being raised in the second action.

                                         II.
                                         II.
                                         ___

                                       Analysis
                                       Analysis
                                       ________

                      Porn appeals the district  court's grant of summary

            judgment  in favor  of  National  Grange,  arguing  that  the

            judgment in the first action  for breach of contract does not

            preclude  his bad-faith,  emotional  distress, and  statutory

                                         -5-
                                          5

            unfair  practices  claims  (collectively  "bad-faith  claim")

            against National Grange  in this action.   Specifically, Porn

            argues that (1) the facts relevant to his bad-faith claim are

            separate from those  relevant to his contract  claim, (2) the

            bad-faith facts do not form  a convenient trial unit with the

            contract facts, (3) treatment of both sets of facts as a unit

            does not conform to the parties' expectations, and (4) it was

            inequitable to apply the res judicata bar where, as here, the

            insurer's  conduct in the  contract litigation forms  part of

            the bad-faith action.2  After reciting the standard of review

            and setting forth the governing res judicata law, we consider

            each argument in turn.    

                      We  review a  grant of  summary  judgment de  novo,
                                                                __  ____

            under  the same standards that govern  the district court, to

            determine  whether  "the pleadings,  depositions,  answers to

                                
            ____________________

            2.  All  of these arguments attack the district court's claim
            preclusion holding.   Porn  also makes arguments  challenging
            the district court's conclusion that  the portion of his bad-
            faith  claim relating  to National  Grange's  conduct in  the
            first  action was barred by issue  preclusion.  However, when
            Porn commenced the first action, he knew that National Grange
            had neither settled  his benefits claim  despite overwhelming
            evidence  that  Willoughby  alone  caused  the  accident  nor
            conducted  an independent investigation into the cause of the
            accident  in  an   attempt  to  offset  Porn's   evidence  of
            Willoughby's wrongdoing.   Thus, we conclude that  Porn could
            have  raised a  bad-faith  claim based  on  this evidence  of
            National  Grange's litigation conduct in the first action and
            could also  have used  National  Grange's ensuing  litigation
            conduct as further evidence of that claim in the same action.
            The claim therefore is barred by the doctrine of res judicata
            (claim  preclusion), see  infra.    Accordingly,  we  do  not
                                 ___  _____
            consider Porn's arguments regarding issue preclusion.

                                         -6-
                                          6

            interrogatories, and  admissions on  file, together  with the

            affidavits, if any, show that there is no genuine issue as to

            any material  fact and that  the moving party is  entitled to

            judgment  as a matter  of law."   Fed. R. Civ.  P. 56(c); see
                                                                      ___

            also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).  The
            ____ _____________    _______

            applicability  of the doctrine of  res judicata is a question

            of law subject to plenary review.  Wolf v. Gruntal &  Co., 45
                                               ____    ______________

            F.3d 524, 527 (1st Cir. 1995).  

                      Because  the  judgment  in  the  first  action  was

            rendered  by a federal  court, the preclusive  effect of that

            judgment  in  the  instant diversity  action  is  governed by

            federal res judicata principles.  See Johnson v. SCA Disposal
                                              ___ _______    ____________

            Servs., Inc.,  931 F.2d 970,  974 (1st Cir. 1991)  (noting in
            ____________

            addition  that  the  application   of  federal  res  judicata

            principles  allows federal  courts to  define  the effect  of

            their  own judgments); see  also Apparel  Art Int'l,  Inc. v.
                                   ___  ____ _________________________

            Amertex Enters. Ltd., 48 F.3d  576, 582-83, 583 n.7 (1st Cir.
            ____________________

            1995).   Under  the  federal  law of  res  judicata, a  final

            judgment on  the merits  of an action  precludes the  parties

            from relitigating claims that were  raised or could have been

            raised in  that action.   Allen v.  McCurry, 449 U.S.  90, 94
                                      _____     _______

            (1980).  For a claim  to be precluded, the following elements

            must be established:   (1) a final judgment  on the merits in

            an earlier action, (2) sufficient identity between the causes

            of action  asserted in the  earlier and later suits,  and (3)

                                         -7-
                                          7

            sufficient identity  between the  parties in  the two  suits.

            See  Apparel Art,  48 F.3d  at 583;  Gonzalez v.  Banco Cent.
            ___  ___________                     ________     ___________

            Corp., 27 F.3d 751, 755 (1st Cir. 1994).  Because there is no
            _____

            dispute that  the first  and third elements  of the  test are

            established, we  focus on the  second element:   whether  the

            causes of  action  in  the two  lawsuits  are  sufficiently  

            identical.  

                      In  defining the cause  of action for  res judicata

            purposes,  this  circuit  has   adopted  the  "transactional"

            approach of the Restatement (Second) of Judgments.  Manego v.
                                                                ______

            Orleans Bd. of  Trade, 773 F.2d 1,  5 (1st Cir. 1985),  cert.
            _____________________                                   _____

            denied, 475 U.S.  1084 (1986).  Under this  approach, a valid
            ______

            and  final judgment  in  the  first  action  will  extinguish

            subsequent claims  "'with respect to  all or any part  of the

            transaction,  or series  of  connected  transactions, out  of

            which  the action arose.'"  Id. (quoting Restatement (Second)
                                        ___

            of  Judgments    24  (1982)).    We  determine  what  factual

            grouping  constitutes a  "transaction" pragmatically,  giving

            weight to such  factors as "whether the facts  are related in

            time,  space,  origin,  or motivation,  whether  they  form a

            convenient trial unit, and whether their treatment as a  unit

            conforms  to the parties'  expectations."  Restatement    24;

            see  also Aunyx Corp.  v. Canon U.S.A.,  Inc., 978 F.2d  3, 7
            ___  ____ ___________     ___________________

            (1st Cir.  1992), cert. denied,  507 U.S. 973 (1993).   These
                              _____ ______

            factors,  however,  are  merely  suggestive;  they  are   not

                                         -8-
                                          8

            intended   to  be   exhaustive,  nor   is   any  one   factor

            determinative.   See Restatement    24  cmt. b;  Gonzalez, 27
                             ___                             ________

            F.3d at 756.   Finally, in making this  determination, we are

            mindful  that  a  single  transaction  may  give  rise  to  a

            multiplicity  of  claims,  Gonzalez,  27  F.3d  at  755,  and
                                       ________

            recognize that "the  mere fact that different  legal theories

            are  presented in  each  case  does not  mean  that the  same

            transaction is not behind each," Manego, 773 F.2d at 6.
                                             ______

            A.  Consideration of the Restatement Factors
            ____________________________________________

                      With that background, we inquire whether the causes

            of  action  asserted  in  the  first  and  second  suits  are

            sufficiently  identical,  focusing on  the  three Restatement

            factors. 

                      1.  Relation of the Facts in Time, Space, Origin,
                      _________________________________________________
            or        Motivation
            ___       __________

                      The first Restatement factor asks whether the facts

            underlying  the breach of  contract and bad-faith  claims are

            related  in time, space, origin, or motivation, i.e., whether
                                                            ____

            they  arise out  of  the same  transaction, seek  redress for

            essentially the same basic wrong,  and rest on the same or  a

            substantially  similar factual basis.   See Kale  v. Combined
                                                    ___ ____     ________

            Ins.  Co. of  Am.,  924  F.2d 1161,  1166  (1st Cir.),  cert.
            _________________                                       _____

            denied, 502  U.S. 816 (1991).   In this case,  our answers to
            ______

            these questions lead us to conclude that the facts underlying

            the two claims are closely related.

                                         -9-
                                          9

                      First,  we find that  both the bad-faith  claim and

            the contract claim derive from the same occurrence:  National

            Grange's refusal to pay Porn the proceeds of his underinsured

            motorist policy  for the  July 17,  1990, accident.   Second,

            although the two claims present different legal theories, one

            sounding in  contract and the  other in tort, they  both seek

            redress for essentially the same basic wrong.   For instance,

            Porn's contract  action sought redress for  National Grange's

            refusal  to  pay  the policy  proceeds,  while  his bad-faith

            action sought redress for its unreasonable refusal to pay the

            proceeds, see Buckman v. People  Express, Inc., 530 A.2d 596,
                      ___ _______    _____________________

            599 (Conn. 1987).  Third,  a comparison of the two complaints

            illustrates that  the two  claims rest  on a  similar factual

            basis.    Both  complaints,  in  their  factual  allegations,

            outline the circumstances of the accident, the particulars of

            the  insurance  policy,  and  National  Grange's  conduct  in

            refusing to pay.  In sum, the facts underlying the two claims

            are closely related in time, space, origin, and motivation.3

                                
            ____________________

            3.  A  majority of  the  courts  that  have  considered  this
            question,  i.e., whether  the facts  underlying  a breach  of
                       ____
            insurance   contract   claim  and   a  bad-faith   claim  are
            sufficiently  related for purposes of res judicata, also have
            concluded that both claims arise out of the insurer's refusal
            to pay  the insured the proceeds  of the policy.   See, e.g.,
                                                               ___  ____
            McCarty v. First  of Ga.  Ins. Co., 713  F.2d 609, 612  (10th
            _______    _______________________
            Cir. 1983) (applying  Oklahoma res judicata law);  Duhaime v.
                                                               _______
            American  Reserve Life  Ins.  Co., 511  A.2d 333,  334 (Conn.
            _________________________________
            1986);  Chandler v. Commercial Union Ins. Co., 467 So.2d 244,
                    ________    _________________________
            250 (Ala.  1985); Hubbell v.  Trans World Life Ins.  Co., 408
                              _______     __________________________
            N.E.2d 918,  919 (N.Y.  1980); Stone  v. Beneficial  Standard
                                           _____     ____________________
            Life Ins.  Co., 542 P.2d 892, 894 (Or.  1975).  Of the courts
            ______________

                                         -10-
                                          10

                      Porn expends considerable effort characterizing the

            instant action as arising out  of a transaction separate from

            that giving  rise to the  first action.  In  particular, Porn

            maintains  that  the  bad-faith  action  stems  from National

            Grange's conduct in handling his insurance claim, whereas the

            contract action  stems from the circumstances surrounding the

            car accident.  Porn's definition of the  two transactions out

            of which the  claims arise, however, is  artificially narrow.

            For instance, the contract claim  arises out of more than the

            car  accident  alone.   It  arises  out  of the  accident  in

            conjunction with National  Grange's refusal to pay  under the

            policy.   Indeed, without  the  refusal to  pay, no  contract

            breach could exist.   Similarly, the factual  basis of Porn's

            bad-faith  claim  cannot  be  limited  to  National  Grange's

            conduct in handling  Porn's insurance claim.   In this  case,

            the facts of the car  accident are also probative of National

            Grange's reasonableness in refusing to pay Porn's claim.  For

            instance, if, as  Porn suggests,  the facts  of the  accident

                                
            ____________________

            holding  otherwise,  i.e.,  that  the  facts  underlying  the
                                 ____
            contract and  bad-faith claims  are  unrelated, most  applied
            state-law theories of res judicata  that differ significantly
            from the  federal res  judicata principles  that govern  this
            case.   See,  e.g., Schmueser v.  Burkburnett Bank,  937 F.2d
                    ___   ____  _________     ________________
            1025, 1031 (5th Cir. 1991) (applying Texas res judicata law);
            Robinson v. MFA Mut. Ins. Co., 629 F.2d 497, 501-02 (8th Cir.
            ________    _________________
            1980)  (applying Arkansas's  "primary rights"  theory of  res
            judicata); Corral v. State Farm Mut. Auto. Ins. Co., 155 Cal.
                       ______    ______________________________
            Rptr.  342, 345  (Cal.  Ct.  App.  1979)  (applying  "primary
            rights" theory); but see Rios  v. Allstate Ins. Co., 137 Cal.
                             ___ ___ ____     _________________
            Rptr. 441,  445-46 (Cal.  Ct. App.  1977) (reaching  contrary
            conclusion under "primary rights" theory).     

                                         -11-
                                          11

            present a clear  picture that Willoughby was the  legal cause

            of  the accident and  Porn was not  contributorily negligent,

            National  Grange would  have had less  reason to  contest the

            claim andtherefore its refusalto pay appearsless reasonable.4

                      Admittedly, each  legal theory relies  more heavily

            on some  of the underlying  facts than others.   The accident

            facts,  for example,  will likely  receive  more emphasis  in

            proving  the  contract  claim,   while  the  facts  regarding

            National Grange's conduct in handling  Porn's insurance claim

            will be more focal in  proving the bad-faith claim.  However,

            the  Restatement makes clear  that merely because  two claims

            depend  on different  shadings  of  the  facts  or  emphasize

            different  elements of  the facts,  we should  not color  our

            perception  of  the  transaction  underlying  them,  creating

            multiple  transactions  where  only  one transaction  exists.

            Restatement    24  cmt. c.   By  focusing exclusively  on the

            facts most critical to each claim, Porn has ignored the other

                                
            ____________________

            4.  Porn's argument  that the facts  underlying the bad-faith
            and  contract claims  are not  related  in time  is similarly
            unpersuasive.  Porn argues that the facts underlying the bad-
            faith action  go to National  Grange's handling of  the claim
            after  the car  accident,  while  the  facts  underlying  the
            _____
            contract action  go to the  accident itself.  However,  as we
            explained above,  the factual basis of the contract action is
            formed  by more  than  just the  accident;  it also  includes
            National Grange's refusal  to pay, and that  refusal occurred
            after  the accident.   Therefore,  the  facts underlying  the
            contract  action cannot be limited to the accident itself but
            extend to the time period after the accident as well, thereby
            minimizing any time differential between the facts underlying
            the two claims. 

                                         -12-
                                          12

            facts underlying each  claim.  Accordingly, we  reject Porn's

            grouping of the facts underlying the two claims into separate

            transactions. 

                      2.  Trial Convenience
                      _____________________

                      The  second   Restatement  factor  directs   us  to

            determine  whether the facts underlying the contract and bad-

            faith claims  form  a convenient  trial unit.   This  factor,

            aimed at  conserving judicial resources, provides  that where

            the witnesses or  proof needed in  the second action  overlap

            substantially with those used in the first action, the second

            action should ordinarily be precluded.  Restatement   24 cmt.

            b.  We conclude that Porn's bad-faith claim would use much of

            the same evidence produced in  the first action for breach of

            the  insurance contract,  and therefore  it  would have  been

            convenient and efficient for the district court to have heard

            the two claims in the same action.

                      Testimony and  exhibits about the  circumstances of

            the accident are relevant to both  the contract and bad-faith

            claims.    To  establish that  National  Grange  breached the

            insurance policy in  not paying his claim, Porn  had to prove

            that  Willoughby's negligence caused the accident and that he

            was  not contributorily negligent.  Accordingly, in the first

            action, Porn  presented evidence detailing  the circumstances

            of the  accident.    This evidence  would  likely  have  been

            repeated in a second action for bad faith, as Porn would have

                                         -13-
                                          13

            sought   to  portray  the   accident  facts  as   so  plainly

            establishing Willoughby's negligence that National Grange had

            no credible reason for refusing to pay his claim.    

                      The  evidence in the contract action and the second

            action  would  also  overlap  as  to  the  terms   of  Porn's

            underinsured motorist policy and National Grange's refusal to

            pay his  claim.   To prove  breach of contract,  Porn had  to

            establish that National Grange refused to pay his claim where

            the  terms  of  the  policy  so   required.    Likewise,  the

            reasonableness of  National  Grange's refusal  to pay,  i.e.,
                                                                    ____

            whether it  acted in  bad faith, depends  on what  the policy

            required.  

                      Rather  than  addressing  the degree  to  which the

            evidence supporting each claim  overlaps, Porn challenges the

            convenience  of bringing  the claims  together  on two  other

            grounds.   First, Porn  argues that evidence  relevant to the

            bad-faith  claim,  specifically  evidence  of  the amount  of

            insurance available  and the  fact of  settlement offers  and

            negotiations,  would prejudice  the insurer's defense  of the

            contract claim,  and therefore the  two claims do not  form a

            convenient trial  unit.  However, we agree  with the district

            court  that  any  potential prejudice  could  be  resolved by

            bifurcating the trial.  With bifurcation, the evidence common

            to  both  claims,  which was  considerable,  could  have been

            presented at once and not "in separate  lawsuits commenced at

                                         -14-
                                          14

            a distance of months or years."  Porn v. National Grange Mut.
                                             ____    ____________________

            Ins. Co., No. 95-140-P-H, 1995 WL 626374, at *3 (D. Me. Sept.
            ________

            27, 1995).

                      Second,  Porn argues  that  he  had  to  procure  a

            judgment that National Grange breached the insurance contract

            before the  cause of  action for bad  faith could  accrue and

            therefore  the bad-faith  and contract  claims  could not  be

            joined in the same action.   Porn bases this contention on an

            assumption  that, although  a Connecticut  court  has yet  to

            decide this issue, it would follow jurisdictions like Florida

            and  require a  judgment of  contract breach  as a  condition

            precedent to  the pursuit of  a bad-faith claim.   See, e.g.,
                                                               ___  ____

            Blanchard v. State Farm Mut.  Auto. Ins. Co., 575 So.2d 1289,
            _________    _______________________________

            1290 (Fla.  1991)  ("[A]n  insured's  underlying  first-party

            action for insurance benefits against the insurer necessarily

            must be resolved favorably to the insured before the cause of

            action   for  bad  faith   in  settlement   negotiations  can

            accrue.").5  The district court correctly observed,  however,

            that the Connecticut  Supreme Court rejected  this contention

            in Duhaime v.  American Reserve Life Ins. Co.,  511 A.2d 333,
               _______     ______________________________

                                
            ____________________

            5.  Porn's reliance  on McAllaster  v. Bruton,  655 F.  Supp.
                                    __________     ______
            1371,  1374 (D.  Me. 1987),  as additional  support for  this
            proposition is  sorely misplaced.   McAllaster  held that  an
                                                __________
            insurer  could  not  be required  to  pay  uninsured motorist
            benefits without a prior judgment that the uninsured motorist
            was liable.   Id.  at 1374-75.   McAllaster does  not address
                          ___                __________
            whether a judgment finding breach  of the insurance policy is
            a condition precedent to pursuit of a bad-faith claim.     

                                         -15-
                                          15

            334-35  (Conn. 1986).  Invoking the doctrine of res judicata,

            the  Connecticut  Supreme Court  held that  Duhaime's earlier

            action for breach of the insurance policy barred a subsequent

            action  for  bad  faith.   Id.    In  so holding,  the  court
                                       ___

            implicitly  acknowledged that  a bad-faith action  can accrue

            without a  separate judgment  of contract  breach.   Although

            Duhaime involved  disability insurance  and the  instant case
            _______

            involves underinsured  motorist  insurance,  we  see  nothing

            unique  about  underinsured  motorist  insurance  that  would

            preclude Duhaime's holding from governing here.6
                     _______

                      3.  Parties' Expectations
                      _________________________

                      The final  Restatement factor  is whether  treating

            the underlying facts as a trial unit conforms to the parties'

            expectations.  For the following reasons, we conclude that it

            does.  

                      When he brought his contract suit in November 1993,

            Porn knew the facts necessary for bringing a bad-faith claim.

            He knew  that National Grange had refused to pay; he knew its

            alleged reasons  for so refusing;  and he knew the  extent of

            the delay in payment attributable to the refusal.  Therefore,

                                
            ____________________

            6.  In all events, in a bifurcated trial such as the district
            court envisioned, see supra, the jury would first be asked to
                              ___ _____
            determine the breach of contract  claim.  Only if the insured
            prevailed on that claim would the second (bad-faith) phase of
            the trial transpire.  Thus,  the insured would have to secure
            a finding that  the insurer breached  the contract before  he
            could recover on his bad-faith claim.   We do not think  that
            the Connecticut Supreme Court would require more.  

                                         -16-
                                          16

            because the two claims  arose in the  same time frame out  of

            similar facts, one would reasonably expect them to be brought

            together.   See  18 Charles  A.  Wright &  Arthur R.  Miller,
                        ___

            Federal  Practice  and   Procedure     4407,  at   56  (1981)
            __________________________________

            ("Defendants  may reasonably  demand that disposition  of the

            first  suit establish repose as  to all matters that ordinary

            people  would  intuitively  count  part  of  a  single  basic

            dispute.").   Indeed, in  February 1993,  nine months  before

            filing  the  first action,  Porn wrote  a letter  to National

            Grange in which  he made a demand for his policy proceeds and

            concomitantly threatened to  sue for bad faith.   In light of

            this letter, it would not have been unreasonable for National

            Grange  to expect  that  any  subsequent  lawsuit  that  Porn

            initiated  would include claims  for both breach  of contract

            and bad faith.   Finally, bringing related claims together is

            arguably more conducive to settlement and therefore, at least

            in this case, may have had some pragmatic appeal.         

                      In  sum, applying  the Restatement's  transactional

            test to this case, we conclude that the two lawsuits involved

            sufficiently identical causes  of action.  Because  the cause

            of  action  should not  have  been split  into  two lawsuits,

            Porn's bad-faith claim is barred by claim preclusion.  

            B.  Equitable Exception
            _______________________

                      As his final  argument, Porn contends that  even if

            we  find  that  res  judicata  applies,  equity  demands  its

                                         -17-
                                          17

            suspension  in this  case.   Specifically,  Porn argues  that

            because  National Grange's decision to proceed to judgment in

            the contract  action with no evidence to  support its defense

            ("litigation  conduct") is probative  of bad faith,  the full

            nature of National  Grange's bad-faith tort was  not revealed

            until   judgment  was   entered  in   the   contract  action.

            Therefore, Porn argues, it would  be premature and unfair  to

            require him  to bring his  bad-faith claim together  with his

            contract claim.  

                      The  Supreme Court has  counselled us to  adhere to

            traditional principles  of res judicata  and not to  make any

            "ad hoc determination of the equities in a particular  case."

            Federated Dep't  Stores, Inc.  v. Moitie,  452 U.S.  394, 401
            _____________________________     ______

            (1981) (refusing to condone an exception to an application of

            res judicata  that would  bar relitigation  of an  unappealed

            adverse judgment where  other plaintiffs  in similar  actions

            against common defendants successfully appealed the judgments

            against  them).   In a  post-Moitie  decision, however,  this
                                         ______

            court  has suggested that an "'occasional exception' to claim

            preclusion"  may   still  exist  in  instances  of  "'unusual

            hardship.'"  Kale,  924 F.2d at 1168 (quoting Rose v. Town of
                         ____                             ____    _______

            Harwich, 778 F.2d  77, 82 (1st Cir. 1985),  cert. denied, 476
            _______                                     _____ ______

            U.S. 1159  (1986)); but see  Johnson v. SCA  Disposal Servs.,
                                ___ ___  _______    _____________________

            Inc., 931  F.2d 970, 977  (1st Cir. 1991) (citing  Moitie for
            ____                                               ______

            the proposition that "we cannot relax the principles of claim

                                         -18-
                                          18

            preclusion even if  we find that the equities  cry out for us

            to do so").  Assuming  arguendo that Moitie did not foreclose
                                   ________      ______

            the possibility  of an equitable exception, we  find that, in

            the context of this case, requiring the bad-faith claim to be

            brought  in the first action creates  no unusual hardship for

            Porn and therefore the exception does not apply.  

                      First,   we   challenge  Porn's   assumption   that

            requiring  the  two  claims  to  be  brought  together  would

            necessarily preclude as  support for the bad-faith  claim any

            evidence  about  National  Grange's  decision  to proceed  to

            judgment in the  contract action with no  evidence to support

            its defense.   Had  the  contract and  bad-faith claims  been

            brought  together,  the  district  court  would  likely  have

            bifurcated  the trial into  two phases.   By the  time of the

            bad-faith  phase of  the  trial,  the  contract  phase  would

            already have  been  completed and  Porn would  know both  the

            quality of evidence  National Grange presented to  defend the

            contract  claim and  that the  magistrate  judge had  granted

            judgment  as  a matter  of  law  for  Porn  on the  issue  of

            contributory negligence.   Accordingly,  we see nothing  that

            would  have prevented Porn  from presenting this  evidence in

            the bad-faith phase of the trial and arguing to the jury that

            National  Grange's  refusal  to  settle the  contract  action

                                         -19-
                                          19

            despite insufficient  evidence of  a meritorious  defense was

            more evidence of its bad faith.7

                      Moreover, assuming arguendo  that Porn's assumption
                                         ________

            was  correct and  that at  the time  he brought  the contract

            action he  was unaware of  the litigation conduct  that would

            occur therein, we nonetheless conclude that Porn was aware of

            other conduct by National Grange sufficient to support a bad-

            faith   claim.    Indeed,  of  the  ten  factual  allegations

            supporting  Porn's  bad-faith complaint,  nine were  known to

            Porn  at  the time  he  instituted  the  first action.    For

            instance, the  second complaint alleged  that National Grange

            failed to act on the claim for nine months; failed to make an

            offer on the  claim for sixteen months; failed  to allow Porn

            to  settle  with  Willoughby's   carrier  for  the  available

            liability proceeds for  two years; justified delays  with the

            possibility of other insurance coverage when it  knew no such

            insurance  existed; made Porn  investigate the possibility of

            other coverage;  failed to investigate  the claim; repeatedly

            lied to  Porn about  the policy's terms;  and instructed  its

            claims personnel  to withhold  helpful information about  the

                                
            ____________________

            7.  Even if  the trial had  not been bifurcated and  Porn did
            not yet know  that the magistrate judge  would grant judgment
            as a matter  of law on the issue  of contributory negligence,
            Porn still  could have pointed  to National Grange's  lack of
            evidence of contributory negligence and  argued that National
            Grange's  refusal to  settle the  contract case  with  such a
            meager defense was more evidence of its bad faith.  See supra
                                                                ___ _____
            note 2. 

                                         -20-
                                          20

            policy  from Porn.    Because  the  events  underlying  these

            allegations had occurred  by the time Porn  brought his first

            action, we  find that Porn had ample  opportunity to litigate

            the bad-faith  claim therein,  see Gonzalez,  27 F.3d  at 758
                                           ___ ________

            (holding that for claim preclusion to apply, a litigant first

            must have  had a  full and fair  opportunity to  litigate her

            claim), and  his asserted  inability to  present evidence  of

            National Grange's  litigation conduct  as additional  support

            for his bad-faith claim does not present an

            unusual hardship.

                                         III.
                                         III.
                                         ____

                                      Conclusion
                                      Conclusion
                                      __________

                      For  the   reasons  stated  above,  we  affirm  the
                                                              ______

            district  court's grant  of  summary  judgment  in  favor  of

            National Grange.

                                         -21-
                                          21