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Preferred America Insurance v. Dulceak

February 05, 1999

PREFERRED AMERICA INSURANCE, A/K/A ANSVAR AMERICA INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
LINDA DULCEAK, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Du Page County. No. 97--MR--368

The opinion of the court was delivered by: Justice Colwell

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Honorable Robert E. Byrne, Judge, Presiding.

Plaintiff, Preferred America Insurance, a/k/a Ansvar America Insurance Company (Preferred), filed a complaint for declaratory judgment against defendant, Linda Dulceak (defendant or claimant). The complaint sought to have the circuit court determine whether the judgment entered in a prior, related negligence case, Dulceak v. Cetlinski (No. 94--L--0421) (prior case), should collaterally estop plaintiff from asserting any liability defense during the arbitration of the present case in which claimant has now brought an uninsured motorist claim against plaintiff's insured, George Dulceak. In the prior case, a jury found George 100% liable for the accident in question. Plaintiff prayed that it be allowed to relitigate all issues concerning liability in the present uninsured motorist (arbitration) proceeding and to raise any appropriate defenses as though no prior trial had taken place.

The parties filed cross-motions for summary judgment. On February 2, 1998, the trial court entered summary judgment in favor of defendant and against plaintiff. The court determined that the arbitration of the present claim must be limited to the issue of the nature and the extent of claimant's damages. The thrust of plaintiff's arguments on appeal is that (1) the trial court erred in allowing the claimant to invoke the doctrine of offensive collateral estoppel against plaintiff; (2) plaintiff was not a party or in privity with a party in the prior case where its insured was found to be 100% liable; and (3) it would be unfair to apply offensive collateral estoppel in this case. We disagree, and we affirm.

Preferred issued a policy of insurance to George J. Dulceak under its former designation, Ansvar America Insurance Company, a member of the Preferred Risk Group. On October 15, 1993, there was a collision at a Kane County intersection involving cars driven by George and by Jennifer Cetlinski respectively. George's spouse, Linda Dulceak, a passenger in the car driven by George, alleged that she was injured as a result of the accident.

According to plaintiff's admissions in the record, Linda filed a lawsuit against Cetlinski (No. 94--L--0421) to recover for her injuries. Cetlinski filed a counterclaim and contribution claim against George, alleging that he was at fault. George tendered the defense of the issues to Preferred which then hired counsel (Brittain & Ketcham, P.C.) to defend George in that action. Pursuant to its obligations under the policy, Preferred paid George's defense counsel for their services in defending George at trial. The jury found that Cetlinski was not at fault in the accident and that George was 100% negligent in causing the accident. Linda did not recover damages in that suit. No appeal was taken from that judgment. At no time, from the time Preferred received notice of the accident until the time that judgment was entered upon the jury's verdict, did Preferred send George any correspondence or writing by which it informed George that Preferred was providing him a defense pursuant to a reservation of rights or a non-waiver agreement. Although it appears that Preferred was not a named party to the prior suit, it defended its insured by obtaining counsel and defense counsel sought to show that Cetlinski, not George, was at fault. Preferred states that, as George was a "family member" under its policy, he would not be covered under that policy as to a claim by his spouse. Therefore, he is deemed an "uninsured motorist" as to any claims by his wife.

Linda filed a claim against George under the uninsured motorist provisions of George's policy for injuries she allegedly sustained as a result of the automobile accident in October 1993. Plaintiff filed the present complaint for declaratory judgment, asserting that, since it was not a named party to the Cetlinski action, the parties in the matter pending under the uninsured motorist arbitration clause are not the same; therefore, the judgment in the prior case should not operate as collateral estoppel to bar plaintiff from fully litigating all issues concerning liability, and it should be allowed to raise any appropriate defenses at the arbitration proceeding as though no trial had taken place. The trial court entered judgment against Preferred and for Linda, after concluding that Preferred was in privity with George, its insured, and that its interests were protected in the prior trial. Implicit in the court's Conclusion was that the judgment in the prior case collaterally estopped plaintiff from relitigating the issue of liability. This timely appeal followed.

The question before this court is whether the trial court properly granted summary judgment to defendant and against plaintiff as a matter of law. We review the trial court's decision de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). A motion for summary judgment should be granted only when the pleadings, depositions, 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. Purtill v. Hess, 111 Ill. 2d 229, 240 (1986). Here, the essential and material facts are undisputed. The question presented is a legal one: whether the trial court properly applied the doctrine of collateral estoppel under the facts presented. See In re Paternity of Rogers, 297 Ill. App. 3d 750, 754 (1998).

The doctrine of collateral estoppel or estoppel by verdict, a branch of res judicata, prohibits the relitigation of an issue essential to and actually decided in an earlier proceeding by the same parties or their privies. Rogers, 297 Ill. App. 3d at 755. The basic theory behind the use of the doctrine is that, if two parties undergo a full and fair trial that results in a final judgment, neither party may seek a different result upon the same facts and issues in a subsequent lawsuit. Kessinger v. Grefco, Inc., 173 Ill. 2d 447, 460 (1996). The doctrine is founded upon the need for the finality of judgments. When some specific fact or question has been directly in issue and decided upon and the same fact or question is again put into issue by the same parties or their privies, the former adjudication is conclusive on the parties whether or not the cause of action is the same; further, the parties need not have been arrayed on opposite sides in the prior suit, nor must formal issues have been raised between them. Pechous v. Field Enterprises, Inc., 114 Ill. App. 3d 605, 608 (1983). When properly applied, collateral estoppel promotes fairness and judicial economy by preventing the relitigation in one suit of an identical issue already resolved against the party against whom the bar is sought. Kessinger, 173 Ill. 2d at 460.

The "offensive" use of collateral estoppel occurs when a plaintiff seeks to foreclose a defendant from litigating an issue the defendant has previously litigated unsuccessfully in another action. In re Owens, 125 Ill. 2d 390, 397 (1988). (In this case, Linda, as the claimant, would stand in the position of the plaintiff.) We recognize that our supreme court has cautioned against the indiscriminate application of offensive collateral estoppel where there is no mutuality of parties, but we also note that the mutuality of parties is no longer required. Kessinger, 173 Ill. 2d at 461. Where the minimum elements of the doctrine are satisfied and it is clear that no unfairness will result to the party being estopped, the circuit court may properly conclude that a prior adjudication precludes the relitigation of an issue in the case before it. Kessinger, 173 Ill. 2d at 461, 468. To apply the doctrine, these elements must be satisfied: "(1) the issue decided in the prior suit is identical with the one presented in the pending suit; (2) there was a final judgment on the merits in the prior adjudication; and (3) the party against whom the estoppel is asserted was either a party or in privity with a party in the prior lawsuit." (Emphasis added.) Kessinger, 173 Ill. 2d at 461.

It appears that plaintiff was not a named "party" in the prior action. However, plaintiff argues that, in the prior suit, it was also not in privity with a party (George) who adequately respresented the same legal interest. See People ex rel. Burris v. Progressive Land Developers, Inc., 151 Ill. 2d 285, 296 (1992) (privity is said to exist between parties who adequately represent the same legal interests). Plaintiff suggests that there was a potential conflict of interest between itself and George, its insured. Plaintiff argues that it could very well have been in George's interest to assume 100% liability for the accident and asserts that counsel's primary responsibility was to defend the interest of the insured, not the insurer.

To the extent that we can follow plaintiff's rather disingenuous and strained argument, we find it both untenable and unsupported by the record. We discern no conflict of interest, potential or actual, between plaintiff and George in the prior lawsuit. It is clear from the record that plaintiff chose George's defense counsel who vigorously sought to show, albeit unsuccessfully, that George was not liable--a desirable outcome for and in the interest of the insurer.

It is undisputed that George was adjudicated 100% liable for the accident and this resulted in the entry of a final judgment on the merits. The first two requirments of collateral estoppel have been met. Since it appears that plaintiff was not a named party in the prior suit, the only threshold ...


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