Court Opinion

ID: 9518218
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:47:24.048122+00
Date Added: 2024-06-11T12:27:48.892062
License: Public Domain

CIRILLO, Judge,
dissenting.
On April 2, 1988, a Cessna C-150 single engine aircraft operated by appellant Chester Dempsey crashed on takeoff. Following the accident, appellants Chester Dempsey and his wife, Helen, (the Dempseys) filed suit in federal court against appellee Cessna alleging that the accident was caused by defects in the aircraft’s fuel system. Subsequent to filing the instant case on January 23, 1990, the Dempseys moved for, and were granted, a voluntary dismissal of their federal claim.
On October 15, 1990, the Dempseys agreed to a settlement of all claims against Cessna. The Dempseys accepted $300,-000.00 and, in return, executed a joint tortfeasor release in *185favor of Cessna. Thereafter, counsel for Cessna learned that his client had located certain documents relating to Cessna’s development of a service kit concerning the installation of additional quick drains in the fuel tanks of the C-150 aircraft. In early January, 1991, after determining that these quick drain documents may have been responsive to certain discovery requests by the Dempseys in the voluntarily dismissed federal action, counsel for Cessna notified the Dempseys.
Consequently, the Dempseys filed a second federal action alleging that Cessna had fraudulently induced them to enter into the settlement and joint tortfeasor release. The Dempseys’ claim for relief in this second federal action was for monetary damages; they did not seek rescission of the agreement nor did they tender return of the settlement proceeds.
On September 11, 1991, Cessna filed a motion to dismiss or, in the alternative, for summary judgment in the second federal action. By memorandum opinion dated February 7, 1992, the Honorable Stewart Dalzell dismissed with prejudice the Dempseys’ fraud complaint in the second federal action. In rendering his decision, Judge Dalzell of the United States District Court for the Eastern District applied Pennsylvania law and held that the Dempseys’ failure to tender the settlement consideration constituted an affirmance of the voidable contract and a waiver of the fraud claim. Further, since Judge Dalzell considered information outside the record, his order constituted summary judgment against the Dempseys under Rule 56 of the Federal Rules of Civil Procedure. The Dempseys appealed to the United States Court of Appeals for the Third Circuit which affirmed the order.
After briefs were filed in the Court of Appeals for the Third Circuit, but before oral argument was held, the Dempseys returned to state court and filed a petition to set aside the joint tortfeasor settlement and declare the Dempseys’ release of Cessna null and void. The Dempseys based this petition upon the same fraud claim asserted in the second federal action and seek rescission of the settlement and release. Cessna filed preliminary objections in the nature of a motion *186to deny and strike the petition. The trial court sustained Cessna’s motion by an order dated February 10, 1993.
In their timely appeal, the Dempseys raise the following issues:
1. Whether the trial court abused its discretion and/or committed reversible error by failing to cite or follow Briggs v. Erie Insurance Group, 406 Pa.Super. 560, 594 A.2d 761 (1991), which holds that actions for damages for fraud in the inducement of a settlement are separate and distinct from actions for damages for personal injury?
2. Whether the trial court erred under Briggs in holding that the petition to set aside was barred by the doctrine of res judicata?
3. Whether the trial court erred under Briggs in holding that the petition to set aside was barred by the doctrine of collateral estoppel?
4. Whether the trial court erred under Briggs in holding that the petition to set aside was barred by the doctrine of election of remedies?
Since this is an appeal from an order sustaining preliminary objections in the nature of a demurrer, it must appear with certainty that, upon the facts averred, the law will not permit recovery by the plaintiff. Muhammad v. Strassburger, 526 Pa. 541, 587 A.2d 1346 (1991); Allstate Ins. Co. v. Fioravanti, 451 Pa. 108, 299 A.2d 585, 587 (1973). Preliminary objections should be sustained and a complaint dismissed only in cases which are clear and free from doubt, and any doubt should be resolved by refusal to sustain the objections. Id.
Instantly, the majority has found that the Dempseys’ claim is barred by the doctrine of res judicata. I disagree.
Application of the doctrine of res judicata requires the concurrence of four elements: (1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of the persons and parties to the action; and (4) identity of the quality in the persons for or against whom the claim is made. City of Pittsburgh v. Zoning Board of Adjustment, 522 Pa. 44, 54, 559 A.2d 896, 901 (1989). In the instant case, it is clear *187that parts (3) and (4) of the test have been met as the Dempseys named Cessna as a defendant in both the federal and the state actions. However, an application of this court’s decision in Briggs, supra, 406 Pa.Super. 560, 594 A.2d 761, reveals that parts (1) and (2) of the res judicata test are lacking.
In Briggs, the plaintiffs were the executors of the estates of two women who died as a result of an automobile collision. Erie, the insurer of the driver who operated the vehicle which caused the accident, initiated settlement discussions with the plaintiffs. As a result of these discussions, the plaintiffs entered into a settlement and executed a general release of all their claims arising from the accident.
Despite the release, the plaintiffs subsequently filed a personal injury lawsuit against the driver insured by Erie and another individual alleged to have caused the accident. The defendants pled the defense of the release and filed motions for judgment on the pleadings. In response, the plaintiffs asserted that the release had been fraudulently obtained because an Erie insurance representative had misrepresented policy limits during settlement discussions. The trial court, noting that the defendants were not accused of perpetrating the fraud, granted the defendants’ preliminary objections based on the fact that the plaintiffs had not tendered the settlement proceeds. On appeal, this court affirmed the trial court’s decision.
The plaintiffs next initiated a lawsuit against Erie claiming that Erie had committed fraud by misrepresenting policy limits during the original settlement discussions. In this second action, the plaintiffs sought damages rather than rescission as remedy. Erie moved for summary judgment which was granted by the trial court. Ultimately, this court vacated the trial court’s order, holding that the dismissal of the actions against the two original defendants did not preclude a second suit for an independent fraud against Erie. In his concurring opinion, Judge Brosky wrote:
Appellee has also suggested that the present action is barred by the doctrine of res judicata. However, this is not *188the case. Appellant’s first action was a claim for liability based upon the negligent operation of a motor vehicle. The present action is a claim for fraud based upon settlement negotiations which ensued after the automobile accident. Not only are the parties different, the nature of the claims and the facts supporting them, although interrelated, are distinctly different as well. Therefore, res judicata does not bar the present action.
406 Pa.Super. at 570, 594 A.2d at 765.
Similarly, in the instant case, the Dempseys have initiated two different claims with very different underlying facts. In the state action, the Dempseys allege negligence, strict liability, and breach of warranty arising from the aircraft accident. In the federal action, the Dempseys claimed fraud, civil conspiracy, and concerted action arising from the defendants’ conduct during the course of the settlement negotiations and other pretrial negotiations subsequent to the aircraft accident. Additionally, the remedies sought in the actions are also dissimilar. In the federal action, the Dempseys sought monetary damages for fraud. In the state action, they seek monetary damages for the personal injury and rescission of the settlement to fully recover these damages. As in Briggs, although the Dempseys seek rescission of the personal injury settlement based on fraud, this does not change the fact the two actions have different underlying causes of action, arise from different occurrences, and seek different remedies. As such, I believe that the trial court erred in holding that the Dempseys’ claim was barred by the doctrine of res judicata.
The trial court also found that the Dempseys’ claim was barred by the doctrine of collateral estoppel. Collateral estoppel, the doctrine of issue preclusion, forecloses relitigation of an issue of fact or law which was actually litigated and was necessary to the original judgment. Muhammad, 526 Pa. at 546, 587 A.2d at 1348; City of Pittsburgh, 522 Pa. at 54, 559 A.2d at 901. Further, in Briggs, this court held:
The trial court in its opinion in the previous case noted that fraudulent conduct of the insurer was not an issue, and it dismissed Appellant’s claims against the individual tortfea*189sors on the basis that the Appellants had failed to return the settlement proceeds which precluded them from pursuing a rescission of settlement agreement and release. As in Muhammad v. Strassburger, [citation omitted], the doctrine of collateral estoppel does not bar the instant matter since there are issues in this case which were not litigated in Appellants’ case against the individual tortfeasors.
406 Pa.Super. at 566, 594 A.2d at 763.
Similarly, in the instant case, the issue underlying the Dempseys’ petition for rescission has never been litigated. The sole issue actually litigated and decided in the federal action was whether the Dempseys could maintain an action for fraud without tendering settlement proceeds. As that issue was decided against the Dempseys, the ultimate issue of whether fraud actually occurred was never actually litigated or decided. Thus, while the federal court decided that the Dempseys could not proceed with their action for fraud, the federal court did not rule upon whether fraud actually occurred. Accordingly, since the issue of fraud, which underlies the Dempseys’ petition for rescission in the instant case, was not litigated and decided in the federal action, I believe that the trial court erred in holding that the doctrine of collateral estoppel barred the Dempseys’ claim.
The trial court also held that the Dempseys’ claim was barred by the doctrine of election of remedies. In reaching its conclusion, the trial court found that the Dempseys, having affirmed the settlement by suing for fraud in the federal action, could not now take the inconsistent position of disaffirming the settlement by petitioning for rescission. I find this reasoning to be directly contrary to this court’s decision in Briggs.
In Briggs, this court found that the plaintiffs’ cause of action for fraud was not based upon claims arising out of the settlement contract, but was solely based upon claims related to Erie’s conduct during the settlement negotiations. 406 Pa.Super. at 567, 594 A.2d at 763. As such, this court went on to hold that the fraud action was consistent with the earlier *190action for rescission and, therefore, the doctrine of election of remedies did not apply. Id. The same is true for the instant case. The Dempseys’ federal action for fraud was based solely upon claims relating to the actions of Cessna during the settlement negotiations, while the present action for rescission is based upon the settlement contract itself. The mere fact that the Dempseys initiated their fraud action before they sought rescission does not preclude application of this court’s holding in Briggs. Thus, I believe that there is nothing inconsistent about the Dempseys affirming the settlement by suing for fraud and now seeking rescission to pursue the underlying personal injury action. Accordingly, I believe that the trial court erred in holding that the doctrine of election of remedies barred the Dempseys’ claim. Consequently, I would reverse the order of the trial court and allow the Dempseys to proceed to trial.
Further, I fail to understand the majority’s repeated attempts to discount Briggs. I believe that our opinion in Briggs was well reasoned and went to great lengths to serve justice. Further, the relevance of Briggs to the instant case is undeniable, as the facts and issues in both cases are nearly identical.
The majority, in the instant case, has not only discounted the import of Briggs, but, in the process, it has created an unjust result. Beginning with Judge Dalzell’s questionable application of relevant Pennsylvania law in their federal action,1 and culminating with the majority’s decision today, the *191Dempseys’ have been denied access to our judicial system at every turn. As such, Cessna may have been allowed to benefit from its conduct during settlement negotiations and Mr. Dempsey may never be allowed to present evidence to a jury that Cessna’s negligence caused his crippling injuries. I find this outcome to be reprehensible.
Accordingly, I dissent.
KELLY, J., joins.

. In dismissing the Dempseys’ federal action, Judge Dalzell, relying upon Nocito v. Lanuitti, 402 Pa. 288, 167 A.2d 262 (1961), found that the Dempseys could not recover monetary damages for Cessna’s fraud without first returning the proceeds of the settlement. This reasoning has been re-affirmed by the majority today. I, however, have reservations about characterizing this as the correct application of relevant Pennsylvania law.
In Briggs we stated the following:
Appellants do not in their Complaint seek rescission of the releases, but rather seek damages for the losses they have allegedly suffered due to this fraudulent action. Because Appellants are not seeking to avoid their releases, a return of the settlement proceeds is not a prerequisite to this action.
*191406 Pa.Super. at 564, 594 A.2d at 763. Since the facts and issues presented in Briggs so closely mirror those presented in the present case, I have difficulty finding that the above passage would not apply instantly. Obviously, this is not the appropriate forum to review Judge Dalzell’s decision, however, I feel compelled to question its propriety.