Court Opinion

ID: 9533712
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:34:07.186961+00
Date Added: 2024-06-11T13:29:08.534405
License: Public Domain

BABCOCK, Judge,
dissenting.
I respectfully dissent.
Central to the application of the doctrine of collateral estoppel here is resolution of the issue whether privity exists between the El Paso County Prosecutor and the State Farm Insurance Company. The circumstances of this case warrant fully the trial court’s conclusion as to this issue and its application of the doctrine of collateral estoppel against State Farm.
“Privity for estoppel purposes is a creature of particular circumstances which may be described by a variety of terms including ‘substantial identity’ ... and status as a ‘virtual representative’ ... Whatever the label, the fundamental issue is whether the party against whom estoppel is asserted has a sufficient identity of interests with the losing litigant in the prior suit to make the assertion of judicial finality consistent with fairness to all litigants involved. The question is factual and one of substance not form.”
Church of Scientology v. Linberg, 529 F.Supp. 945 (C.D.Calif.1981) (emphasis added); see Expert Electric, Inc. v. Levine, 554 F.2d 1227 (2d Cir.1977), cert. denied, 434 U.S. 903, 98 S.Ct. 300, 54 L.Ed.2d 190 (1977); People v. Tynan (Colo.App. No. 83CA0590, November 8, 1984).
“One who prosecutes or defends a suit in the name of another to establish and protect his own right, or who assists in the prosecution or defense of an action in aid of some interest of his own is as much bound as he would be if he had been a party to the record.”
Montana v. United States, 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) (emphasis added). Identity of interest between the parties is the linchpin upon which privity is determined as an element of collateral estoppel. See Waitkus v. Pomeroy, 31 Colo.App. 396, 506 P.2d 392 (1972), rev’d on other grounds, Pomeroy v. Waitkus, 183 Colo. 344, 517 P.2d 396 (1973).
The majority cites Bernhard v. Bank of America National Trust & Savings Ass’n, *79719 Cal.2d 807, 122 P.2d 892 (1942) for the definition of a privy as one who is “directly interested in the subject matter, and had a right to make a defense, or to control the 'proceeding, and to appeal from the judgment.” (emphasis added) This definition is overly rigid in that the emphasized language implies that for one to be a privy one must have been subject to joinder as a party in the first action. While Bernhard was cited in Pomeroy v. Waitkus, supra, privity was not there an issue.
Moreover, Bernhard was cited in Murphy v. Northern Colorado Grain Co., Inc., 30 Colo.App. 21, 488 P.2d 103 (1971) relative to who may assert a plea of res judicata against whom. It was held that res judicata could be asserted by defendant in the later action against plaintiff, who had lost the identical issue as defendant in the earlier action, even though defendant in the later action was neither a party to or in privity with a party to the earlier action. Hence, any definition of privity in Murphy is pure dictum.
“Courts are no longer bound by rigid definitions of parties or their privies for purposes of applying collateral estoppel or res judicata.” United States v. ITT Rayonier, Inc., 627 F.2d 996 (9th Cir.1980). Thus, focus should be on the identity of interest between the first party litigant and the third party against whom the doctrine is asserted in light of the nature and degree of that third party’s participation in the prior action. See Montana v. United States, supra; United States v. ITT Rayonier, Inc., supra; Restatement (Second) of Judgments § 39.
Here, over the course of a year State Farm vigorously sought and eventually obtained Mason’s prosecution. State Farm supplied the prosecution with its witnesses, transcripts of depositions obtained in this action (including that of defendant), financial records supplied by Mason during discovery, and an audit of Mason’s business. Defendant did not assert his Fifth Amendment privilege against self-incrimination in this case, and this evidence was available to the prosecution and admissible at the preliminary hearing. State Farm’s attorney in this case advised the trial court of State Farm’s desire to seek Mason’s prosecution. On one occasion the prosecutor appeared before the trial court to assist in the coordination of this action with prosecution in the criminal case. It is evident that State Farm sought Mason’s conviction of the arson charge before bringing this ease to conclusion.
The majority concedes that State Farm had a substantial interest in the outcome of the criminal action, but asserts that the district attorney does not “represent” State Farm and its interests. On the contrary, Mason’s conviction in the criminal case would have been conclusive in favor of State Farm in this action. Restatement (Second) of Judgments § 85, comment e (1980); see North River Insurance Co. v. Militello, 100 Colo. 343, 67 P.2d 625 (1937).
It is obvious that State Farm could not as a matter of law compel the filing of charges or “conduct” the preliminary hearing in the criminal case. However, to say that State Farm had no de jure control over the prosecution misses the mark because as a matter of fact, but for State Farm, criminal arson charges would not have been filed against Mason. And, the prosecution substantially relied upon State Farm’s work product as the basis for its case at preliminary hearing. Thus, although not a party, State Farm plainly had a sufficient “laboring oar” in the conduct of the criminal action to actuate principles of collateral estoppel. Montana v. United States, supra. The trial court’s finding of privity is supported by the record and is binding on appeal. People v. Tynan, supra.
The general rule is that where judgment of acquittal has entered for defendant, the difference in relative burdens of proof between the criminal and civil actions precludes the application of the doctrine of collateral estoppel in the civil case. United States v. One Assortment of 89 Firearms, — U.S. -, 104 S.Ct. 1099, 79 L.Ed.2d 361 (1984); Restatement (Second) of Judgments § 85, comment g (1980). This is so because the judgment of acquittal in the *798criminal action does not negate the possibility that the matter there in issue may be established by a preponderance of the evidence in the civil case. See United States v. One Assortment of 89 Firearms, supra. Moreover, the government does not ordinarily have a right of meaningful appellate review from a criminal judgment of acquittal. See Restatement (Second) of Judgments § 85, comment g (1980). “Hence, it would be a rare case in which an acquittal could result in preclusion against the government [or its privy] in a subsequent civil action.” Restatement (Second) of Judgments § 85, comment g (1980). The rare exception exists in this case.
Mason was not acquitted upon a failure of the prosecution to prove that he had committed arson beyond a reasonable doubt. Rather the charges were “dismissed” because the prosecution could not establish probable cause to believe that Mason had committed the arson.
At preliminary hearing the trial court considers the evidence in the light most favorable to the prosecution. Hunter v. District Court, 190 Colo. 48, 543 P.2d 1265 (1975). Probable cause is established on “evidence sufficient to induce a person of ordinary prudence and caution conscientiously to entertain a reasonable belief that the defendant may have committed the crimes charged.” People v. Treat, 193 Colo. 570, 568 P.2d 473 (1977) (emphasis added). And, at preliminary hearing the trial court is not bound by rigid rules of evidence. See People v. Quinn, 183 Colo. 245, 516 P.2d 420 (1973). Thus, the prosecution’s burden at the preliminary hearing is substantially less than that of a preponderance of the evidence. Moreover, the People have a right to appeal dismissal of charges following preliminary hearing and seek their reinstatement. See C.A.R. 21(a); People v. Root, 650 P.2d 562 (Colo.1982); People ex rel. Leidner v. District Court, 198 Colo. 204, 597 P.2d 1040 (1979).
State Farm, as the prosecution’s privy, could not establish “probable cause” to believe that Mason had committed the arson. Therefore, the dismissal, which was not appealed, became final and conclusive in favor of Mason against State Farm in this declaratory judgment action.
I would hold that State Farm’s identity of interest with the prosecution in the criminal action, in light of the degree of its participation therein, made State Farm a privy of the prosecution. There is, thus, an identity of interest and issues in both the criminal and civil action, and State Farm, through the state, thereby had a full and fair opportunity to litigate those issues in the criminal proceeding. See People v. Tynan, supra.
The majority attempts to distinguish the supporting cases of Brown v. City of New York, 80 A.D.2d 596, 436 N.Y.S.2d 37 (1981) and Irizarry v. City of New York, 79 Misc.2d 346, 357 N.Y.S.2d 756 (1974). However, the supposed distinction that the privys there were separate “governmental entities” is without significance because regardless of the nature of the “entity”:
“To preclude parties from contesting matters that they have had a full and fair opportunity to litigate protects their adversaries from the expense and vexation attending multiple lawsuits, conserves judicial resources and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions.”

Montana v. United States, supra.

Hence, I would affirm the trial court judgment.
BERMAN, J., concurs.
BABCOCK, J., dissents.