GEORGE A OUNAN V HASTINGS MUTUAL INSUR CO
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STATE OF MICHIGAN
COURT OF APPEALS
GEORGE A. OUNAN and LENORA OUNAN,
individually and as assignees and subrogors of GLENN
GUMERSON, DONALD LEITZ, and RITA LEITZ,
UNPUBLISHED
December 6, 1996
Plaintiffs-Appellants,
v
No. 182100
LC No. 94-009097-CK
HASTINGS MUTUAL INSURANCE COMPANY,
Defendant-Appellee.
Before: Sawyer, P.J., and Griffin and M.G. Harrison,* JJ.
PER CURIAM.
Plaintiffs appeal as of right an order of the circuit court granting summary disposition to
defendant pursuant to MCR 2.116(C)(7) [claim barred by prior judgment]. We reverse.
In 1989, plaintiffs sued Glen Gumerson, Donald and Rita Leitz, and another defendant for
injuries sustained in a boat explosion. The boat was owned and operated by either Gumerson, the
Leitzes, or all three. While the tort case was pending, the Leitzes initiated a separate action for
declaratory judgment that a yacht casualty insurance policy Gumerson purchased from defendant,
Hastings Insurance Company (Hastings), covered the incident spawning plaintiffs’ tort claim. Gumerson
filed a cross-claim against Hastings, contending that Hastings had a duty to defend and seeking a
declaration that his policy with Hastings covered the loss. Additionally, plaintiffs answer sought
declaratory judgment that Gumerson’s policy covered any judgment rendered against him.
After the trial court realigned the parties by placing plaintiffs, Gumerson, and the Leitzes as
plaintiffs and Hastings as defendant, Hastings filed a motion for summary disposition on the basis that
Gumerson orally canceled the insurance policy two days before the boat exploded. Thereafter,
Gumerson and Hastings stipulated to entry of an order dismissing Gumerson’s cross-complaint against
Hastings with prejudice. Plaintiffs objected to the dismissal because they wished to challenge Hastings’
obligation under the insurance contract even if Gumerson did not want to. Nevertheless, on July 22,
* Circuit judge, sitting on the Court of Appeals by assignment.
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1992, the circuit court entered an order dismissing Gumerson’s claim against Hastings, stating that “if, in
fact, you’re [plaintiffs] found to have a claim against Gumersons [sic], and if Gumersons [sic] were to
prove uncollectable, you may possibly have some action against the insurer Hastings as a third-party
beneficiary of a policy of insurance, your [plaintiffs’ counsel’s] people wouldn’t be prejudiced in that
regard.” Plaintiff attempted to appeal the ruling, but this Court denied plaintiffs’ application for leave to
file a delayed appeal on August 24, 1993.
On August 19, 1994, plaintiffs obtained a consent judgment in the underlying tort action against
Gumerson and the Leitzes in the amount of $300,000 plus $118,093 in interest. Pursuant to the
consent judgment, the named defendants paid plaintiffs a combined total of $50,000, and Gumerson
assigned plaintiffs his rights under the insurance policy. On August 31, 1994, plaintiff filed the instant
action to collect the unsatisfied portion of the judgment. However, the trial court granted summary
disposition to Hastings pursuant to MCR 2.116(C)(7) on the basis that plaintiffs could establish standing
only as Gumerson’s assignee, and that the consent judgment between Hastings and Gumerson
collaterally estops plaintiff from claiming that Hastings is obliged to cover the loss.
On appeal, plaintiffs first contend that, as judgment creditors, they have independent standing to
obtain a declaratory judgment regarding the extent of Hastings’ obligation to Gumerson, plaintiffs’
judgment debtor. We agree. Where a judgment remains unsatisfied, MCR 3.101 entitles a judgment
creditor to seek a writ of garnishment against anyone he reasonably believes to be indebted to the
judgment debtor. Further, MCR 2.605(A)(2) entitles a litigant to seek a declaratory judgment
whenever the lower court would have “jurisdiction of an action on the same claim or claims in which the
plaintiff sought relief other than a declaratory judgment.” See Allstate Ins Co v Hayes, 442 Mich 56,
65, 67-68; 449 NW2d 743 (1993). Here, because they claim that Hastings is obligated to pay their
judgment debtor for a portion of an unsatisfied judgment, plaintiffs have standing to bring a garnishment
action against Hastings. See MCR 3.103; Rutter v King, 57 Mich App 152, 171; 226 NW2d 79
(1974). Consequently, plaintiffs have independent standing to initiate this action for declaratory
judgment. MCR 2.605(A); see Hayes, supra at 64-65, 67-68; Cloud v Vance, 97 Mich App 446;
296 NW2d 68 (1980). In view of our holding, we need not address plaintiffs’ alternative arguments
regarding the issue of standing.
Next, plaintiffs contend that the trial court erred in ruling that the consent judgment between
Gumerson and Hastings collaterally estops plaintiffs from claiming that Hastings is obligated under the
insurance policy to cover losses sustained in the boat explosion.1 Again, we agree. In reviewing a
motion for summary disposition pursuant to MCR 2.116(C)(7), we accept plaintiff’s well-pleaded
allegations as true, Shawl v Dhital, 209 Mich App 321, 323; 529 NW2d 661 (1995); Simmons v
Apex Drug Stores, Inc, 201 Mich App 250, 252; 506 NW2d 562 (1993), and examine any
pleadings, affidavits, depositions, admissions, and documentary evidence submitted by the parties in a
light most favorable to the nonmovant. MCR 2.116(G)(5); Skotak v Vic Tanny Int’l, Inc, 203 Mich
App 616, 617; 513 NW2d 428 (1994). If the pleadings show that a party is entitled to judgment as a
matter of law, or if the affidavits or other proofs show that there is no genuine issue of material fact, the
trial court must enter judgment without delay. MCR 2.116(I)(1); Skotak, supra at 617; Nationwide
Mutual Ins Co v Quality Builders, Inc, 192 Mich App 643, 647-648; 482 NW2d 474 (1992).
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Collateral estoppel precludes relitigation of an issue in a subsequent, different cause of action
between the same parties when the prior proceeding culminated in a valid final judgment and the issue
was actually and necessarily determined in the prior proceeding. People v Gates, 434 Mich 146, 154;
452 NW2d 627 (1990); Porter v Royal Oak, 214 Mich App 478, 485; 542 NW2d 905 (1995). To
be actually determined, a question must be put into issue by the pleadings, and actually submitted to and
determined by the trier of fact. Bullock v Huster, 209 Mich App 551, 556; 532 NW2d 202 (1995).
Further, the parties must have h a full and fair opportunity to litigate the issues in the first action.
ad
Gates, supra at 156-157; Bullock, supra at 556. Because collateral estoppel requires that the issues
be actually determined, consent judgments have no collateral estoppel effect. Rzepka v Michael, 171
Mich App 748, 756; 431 NW2d 441 (1988); Van Pembrook v Zero Mfg Co, 146 Mich App 87,
102-103; 380 NW2d 60 (1985); American Mutual Liability Ins Co v Michigan Mutual Liability
Co, 64 Mich App 315, 327; 235 NW2d 769 (1975).
In the present case, the trial court ruled that the consent judgment between Hastings and
Gumerson collaterally estops plaintiff from litigating whether Hastings is obligated under its policy with
Gumerson. This was error because a consent judgment has no collateral estoppel effect. See Rzepka,
supra at 756; Van Pembrook, supra at 102-103; American Mutual Liability Ins Co, supra at 327.
This is especially true where, as here, the coverage issue was neither submitted to nor decided by a trier
of fact, Gates, supra at 154; Porter, supra at 485, and plaintiffs were expressly denied the opportunity
to contest the coverage issue before the consent judgment was entered. Gates, supra at 156-157.
Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ Richard Allen Griffin
/s/ Michael G. Harrison
1
As the trial court recognized, there is no issue whether plaintiffs possess standing as subrogee of
Gumerson’s rights against defendant. Indeed, “judgment creditors having a valid assignment from the
judgment debtor insured may bring a direct action against the insurer for breach of contract of the
insurance policy.” Davis v Great American Ins Co, 136 Mich App 764, 767; 357 NW2d 761
(1984), citing Ward v Detroit Automobile Inter-Ins Exchange, 115 Mich App 30; 320 NW2d 280
(1982).
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