FRANK MONAT V STATE FARM INS CO
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Michigan Supreme Court
Lansing, Michigan 48909
Chief Justice
Maura D. Corrigan
Opinion
Justices
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
FILED APRIL 22, 2004
FRANK MONAT,
Plaintiff-Appellee,
v
No. 121122
STATE FARM INSURANCE COMPANY,
Defendant-Appellant.
_______________________________
BEFORE THE ENTIRE BENCH
MARKMAN, J.
We granted leave to appeal in this case to examine the
mutuality
requirement
of
the
doctrine
of
collateral
estoppel.
In this first-party, no-fault action, defendant
seeks to invoke collateral estoppel to preclude plaintiff
from relitigating an issue already decided in plaintiff’s
third-party
mutuality,
negligence
the
Court
action.
of
Due
Appeals,
only
to
a
split
in
a
lack
of
decision,
affirmed the trial court’s denial of defendant’s motion for
summary
disposition.
We
hold
that,
where
collateral
estoppel is being asserted defensively against a party who
has already had a full and fair opportunity to litigate the
issue,
mutuality
is
not
required.
Further,
because
we
believe that this test has been satisfied, we reverse the
decision of the Court of Appeals, remand this case to the
trial
court,
and
order
that
court
to
grant
defendant’s
motion for summary disposition.
I. BACKGROUND
While stopped at a traffic light, plaintiff’s vehicle
was rear-ended by another vehicle.
Plaintiff claims to
have
a
suffered
accident.
personal
serious
injuries
as
result
of
this
Defendant, plaintiff’s no-fault insurer, paid
injury
protection
(PIP)
benefits,
but
stopped
paying such benefits shortly after plaintiff filed a thirdparty negligence action against the driver of the other
vehicle.
Plaintiff
against defendant for
The
then
PIP
third-party
filed
this
first-party
action
benefits.
action
proceeded
to
trial,
where,
prior to trial, both parties entered into an agreement to
forgo
their
opportunity
to
appeal
in
lieu
of
plaintiff
agreeing to place a cap on damages and defendant agreeing
to pay plaintiff an undisclosed sum of damages regardless
of the jury’s verdict.
of
action”
plaintiff
verdict,
verdict
not
to
defendant
That trial ended with a “no cause
after
the
have
been
moved
for
2
jury
specifically
injured.
summary
found
Following
disposition
in
this
the
first-party action.
of
collateral
Defendant asserted that the doctrine
estoppel
precluded
plaintiff’s
first-party
claim because plaintiff litigated and lost the issue of
injury in the third-party action.
The trial court denied
defendant’s motion.
The Court of Appeals, in a split opinion, affirmed the
trial court’s decision.1
doctrine
of
collateral
The majority concluded that the
estoppel
could
mutuality of estoppel was absent.
not
apply
because
The dissenting judge,
however, opined that the mutuality requirement should be
relaxed in cases such as this and, thus, would have applied
the doctrine of collateral estoppel.
II. STANDARD OF REVIEW
A trial court’s decision to grant or deny a motion for
summary disposition is reviewed de novo.
Stanton v Battle
Creek, 466 Mich 611, 614; 647 NW2d 508 (2002).
III.
ANALYSIS
Under the no-fault act, defendant is obligated to pay
plaintiff benefits for “bodily injury arising out of the
ownership, operation, maintenance or use of a motor vehicle
. . . .”
MCL 500.3105(1).
Defendant asserts that the
doctrine of collateral estoppel applies, and thus it is not
1
Unpublished opinion per curiam, issued February 15,
2002 (Docket No. 222690).
3
liable to pay plaintiff
PIP
benefits because plaintiff was
found not to have been injured in the third-party action.
Generally,
elements
must
for
be
collateral
satisfied:
estoppel
(1)
“a
to
apply
question
three
of
fact
essential to the judgment must have been actually litigated
and determined by a valid and final judgment”; (2) “the
same parties must have had a full [and fair] opportunity to
litigate the issue”;2 and (3) “there must be mutuality of
2
In determining whether a party has had a “full and
fair” opportunity to litigate an issue, courts should look
to the factors set forth in 1 Restatement Judgments, 2d, ch
3, Former Adjudication, §§ 28-29.
Section 28, p 273,
provides:
Although an issue is actually litigated and
determined by a valid and final judgment, and the
determination is essential to the judgment,
relitigation of the issue in a subsequent action
between the parties is not precluded in the
following circumstances:
(1) The party against whom preclusion is
sought could not, as a matter of law, have
obtained review of the judgment in the initial
action; or
(2) The issue is one of law and (a) the two
actions involve claims that are substantially
unrelated,
or
(b)
a
new
determination
is
warranted in order to take account of an
intervening
change
in
the
applicable
legal
context
or
otherwise
to
avoid
inequitable
administration of the laws; or
(3) A new determination of the issue is
warranted by differences in the quality or
extensiveness of the procedures followed in the
two courts or by factors relating to the
allocation of jurisdiction between them; or
(4) The party against whom preclusion
sought had a significantly heavier burden
4
is
of
persuasion with respect to the issue in the
initial action than in the subsequent action; the
burden has shifted to his adversary; or the
adversary has a significantly heavier burden than
he had in the first action; or
(5) There is a clear and convincing need for
a new determination of the issue (a) because of
the potential adverse impact of the determination
on the public interest or the interests of
persons not themselves parties in the initial
action, (b) because it was not sufficiently
foreseeable at the time of the initial action
that the issue would arise in the context of a
subsequent action, or (c) because the party
sought to be precluded, as a result of the
conduct of his adversary or other special
circumstances,
did
not
have
an
adequate
opportunity or incentive to obtain a full and
fair adjudication in the initial action.
Section 29, p 291, provides:
A party precluded from relitigating an issue
with an opposing party . . . is also precluded
from doing so with another person unless the fact
that he lacked a full and fair opportunity to
litigate the issue in the first action or other
circumstances
justify
affording
him
an
opportunity to relitigate the issue.
The
circumstances to which considerations should be
given include those enumerated in § 28 and also
whether:
(1) Treating the issue as conclusively
determined
would
be
incompatible
with
an
applicable scheme of administering the remedies
in the actions involved;
(2) The forum in the second action affords
the party against whom preclusion is asserted
procedural opportunities in the presentation and
determination
of
the
issue
that
were
not
available in the first action and could likely
result in the issue being differently determined;
(3) The person seeking to invoke favorable
preclusion, or to avoid unfavorable preclusion,
could have effected joinder in the first action
between himself and his present adversary;
5
estoppel.”
Storey v Meijer, Inc, 431 Mich 368, 373 n 3;
429 NW2d 169 (1988).
that
in
order
for
a
“[M]utuality of estoppel requires
party
to
estop
an
adversary
from
relitigating an issue that party must have been a party, or
in privy to a party, in the previous action.
words,
‘[t]he
estoppel
is
mutual
if
the
In other
one
taking
(4)
The
determination
relied
on
as
preclusive was itself inconsistent with another
determination of the same issue;
(5) The prior determination may have been
affected by relationships among the parties to
the first action that are not present in the
subsequent action, or apparently was based on a
compromise verdict or finding;
(6) Treating the issue as conclusively
determined may complicate determination of issues
in the subsequent action or prejudice the
interest of another party thereto;
(7) The issue is one of law and treating it
as conclusively determined would inappropriately
foreclose
opportunity
for
obtaining
reconsideration of the legal rule upon which it
was based;
(8) Other compelling circumstances make it
appropriate that the party be permitted to
relitigate the issue.
We note further that the United States Supreme Court
has observed in this regard as follows:
Determining whether a [party] has had a full
and fair chance to litigate [an issue] in an
earlier case is of necessity not a simple matter
[because] . . . as so often is the case, no one
set of facts, no one collection of words or
phrases, will provide an automatic formula for
proper rulings on estoppel pleas.
In the end,
[the] decision will necessarily rest on the trial
courts’ sense of justice and equity.
[BlonderTongue Laboratories, Inc v Univ of Illinois
Foundation, 402 US 313, 333-334; 91 S Ct 1434; 2
L Ed 2d 788 (1971).]
6
advantage of the earlier adjudication would have been bound
by
it,
had
it
gone
against
him.’”
Lichon
v
American
Universal Ins Co, 435 Mich 408, 427; 459 NW2d 288 (1990),
quoting Howell v Vito’s Trucking & Excavating Co, 386 Mich
37, 43; 191 NW2d 313 (1971).
Plaintiff
litigate
the
has
had
issue
a
full
concerning
and
his
fair
opportunity
alleged
injury.
to
The
general rule permits relitigation when “[t]he party against
whom preclusion is sought could not, as a matter of law,
have obtained review of the judgment in the initial action
.
.
.
.”
Restatement
§
28(1)(emphasis
added).
Here,
however, plaintiff voluntarily surrendered his opportunity
for appellate review, to which he had been entitled as a
matter of law.
F3d
352,
359
represented
See, e.g., Greenleaf v Garlock, Inc, 174
(CA
by
3,
1999).
counsel
Plaintiff,
throughout
the
who
entire
has
been
litigation
process, agreed prior to trial of the third-party action to
forgo his opportunity for appeal the jury’s verdict in lieu
of the third-party defendant agreeing to pay plaintiff an
undisclosed
sum
of
damages
regardless
of
such
verdict.
This is, we believe, properly understood as a waiver of any
appeal.
While the “full and fair opportunity to litigate”
normally encompasses the opportunity to both litigate and
appeal,
plaintiff
opportunity
to
here
pursue
voluntarily
relinquished
the
an
in
for
7
appeal
return
consideration—the guaranteed receipt of a minimal sum of
damages
regardless
plaintiff’s
of
decision
the
to
jury’s
forgo
verdict.
any
appeal
Further,
was
a
wise
tactical decision because, as a result of this agreement,
plaintiff
received
an
undisclosed
sum
of
damages
even
though the jury concluded that he had suffered no injury.3
While
this
receive
agreement
such
damages
guaranteed
regardless
that
of
the
plaintiff
jury’s
would
verdict,
there remained nonetheless the possibility that the jury
might
have
awarded
afforded
sufficient
advocacy
regarding
a
greater
incentive
the
injury
award.
for
This
possibility
plaintiff’s
question
in
the
vigorous
initial
litigation.
Moreover, to describe this type of agreement
as
other
anything
than
“full
and
fair”
would
be
to
encourage a plaintiff to negotiate away appeals with one
defendant while keeping in suspense other lawsuits in the
event that plaintiff’s first lawsuit proves unsuccessful.
Overlooking, however, the fact that plaintiff has had
a full and fair opportunity to litigate the injury issue in
3
In response to plaintiff’s attorney’s assertion that
plaintiff “should not be punished just because he entered
into a settlement to his benefit,” the trial court
responded that, in light of this agreement, plaintiff “was
the happiest guy on earth when he heard the jury speak. So
was his lawyer.”
8
this case,4 the dissent accepts plaintiff’s argument that he
is now entitled to another full and fair opportunity to
litigate exactly the same issue only because mutuality of
estoppel does not exist.
As asserted by the dissent, the
general rule supports such an argument—collateral estoppel
precludes relitigation and imposes “‘a state of finality to
litigation where the same parties have previously had a
full
and
fair
opportunity
to
adjudicate
their
claims.’”
Post at 2, quoting Nummer v Dep’t of Treasury, 448 Mich
534, 541; 533 NW2d 250 (1995).
However,
as
the
dissent
acknowledges,
there
is
a
modern trend among the states to recognize exceptions to
the
mutuality
4
requirement.
Moreover,
contrary
to
the
Although the dissent fails to identify any reason why
it believes plaintiff here did not have a "full and fair
opportunity" to litigate the injury issue in the prior
case, the dissent nonetheless criticizes the second prong
of the majority’s
test, stating that any method used to
determine whether a party against whom collateral estoppel
is asserted defensively had a full and fair opportunity to
litigate the issue in a prior case is based on an “‘ad hoc
formulation
of
.
.
.
innumerable
and
unmanageable
factors.’” Post at 5, quoting Howell, supra at 51. While
we agree that a court must “proceed cautiously” when
determining whether this prong has been satisfied, 47 Am
Jur 2d, Judgments, § 651, p 60, quoting McCoy v Colonial
Baking Co, Inc, 572 So 2d 850, 854 (Miss, 1990), we do not
believe that the factors set forth in the Restatement are
“innumerable or unmanageable” as evidenced by the fact that
not only has the dissent failed to identify any reason it
believes such factors are “innumerable and unmanageable,”
but the numerous courts that have repeatedly applied these
factors
have
never
found
them
“innumerable
and
unmanageable.” See 47 Am Jur 2d, Judgments, §§ 651-652, pp
59-68.
9
dissent, this Court has not “consistently and explicitly
declined
the
invitation
to
follow
the
modern
abandoning, in part, the mutuality requirement.
Rather,
mutuality
we
have
does
expressly
not
collateral estoppel.
always
recognized
preclude
the
that
trend”
of
Post at 4.5
“lack
of
application
of
There are several well-established
5
Although the dissent cites Howell for the proposition
that this Court has refused to abandon any part of
mutuality of estoppel, post at 4-5, this Court in Howell
only refused to abandon mutuality of estoppel where
collateral estoppel was asserted offensively.
Howell,
supra at 48. In fact, it appears that, had this Court in
Howell been presented with the issue raised here regarding
defensive use of collateral estoppel, the Court may well
have abandoned mutuality of estoppel where it is asserted
defensively against a party who has already had a full and
fair opportunity to litigate the issue in a prior suit:
Although there may be merit to Justice
Traynor’s observation in Bernhard [v Bank of
American Nat’l Trust & Savings Ass’n, 19 Cal 2d
807; 122 P2d 892 (1942)] that the well-recognized
exceptions to the mutuality rule in effect
produce the same result as unilateral estoppel or
non-mutuality, it should be noted that the
recognized exceptions are confined to defensive
pleading of collateral estoppel . . . . This fact
is quite significant in determining whether
collateral estoppel should or should not apply .
. . "The courts are more inclined to permit the
defensive, than the offensive, use of the
doctrine of collateral estoppel.” [Howell, supra
at 47 n 7 (citation omitted).]
We believe the clear import of Howell is to allow
defensive collateral estoppel where mutuality does not
exist.
Indeed, a reading of Howell makes any other
conclusion difficult, given that the Court there said that
the fact of whether collateral estoppel is pleaded
offensively or defensively “is quite significant.” Id. If
mutuality were always required, the manner of pleading
collateral estoppel would be of no significance.
10
exceptions to the mutuality requirement, such as when an
indemnitor seeks to assert in its defense a judgment in
favor
of
its
indemnitee,
or
where
asserting a judgment for a servant.”
a
master
defends
by
Lichon, supra at 428
n 16.6
Although
the
circumstances
of
the
instant
case
are
distinct from those addressed in Lichon, we now expand the
exceptions to the requirement of mutuality of estoppel to
encompass these circumstances.
the
defensive
use
of
In our judgment, allowing
collateral
estoppel
in
these
circumstances would enhance the efficient administration of
justice and ensure more consistent judicial decisions.
As
early
as
1942,
the
California
Supreme
Court
abandoned mutuality of estoppel altogether on the ground
that “it would be unjust to permit one who has had his day
in court to reopen identical issues . . . .”
6
Bernhard v
Because the Court in Lichon held that “collateral
estoppel [was] unavailable to [defendant] because the issue
. . . was never actually litigated,” Lichon, supra at 428,
we believe that, whatever we said in Lichon concerning
mutuality, was dictum.
Further, in accord with our
analysis of Howell, n 5, what the Court in Lichon said
concerning mutuality was in error because the Court in
Howell did not generally reaffirm its commitment to
mutuality.
11
Bank of America Nat’l Trust & Savings Ass’n, 19 Cal 2d 807,
813; 122 P2d 892 (1942).7
In Bernhard, the court stated:
The criteria for determining who may assert
a plea of res judicata differ fundamentally from
the criteria for determining against whom a plea
of
res
judicata
may
be
asserted.
The
requirements of due process of law forbid the
assertion of a plea of res judicata against a
party unless he was bound by the earlier
litigation in which the matter was decided.
He
is bound by that litigation only if he has been a
party thereto or in privity with a party thereto.
There is no compelling reason, however, for
requiring that the party asserting the plea of
res judicata must have been a party, or in
privity with a party, to the earlier litigation.
[Id. at 811-812 (citations omitted).]
The
United
States
Supreme
Court
in
Blonder-Tongue
Labs, Inc v Univ of Illinois Foundation, 402 US 313, 323324; 91 S Ct 1434; 2 L Ed 2d 788 (1971), relied extensively
on the Bernhard reasoning in holding that mutuality is not
required where collateral estoppel is asserted defensively
and where the plaintiff has already had a full and fair
opportunity to litigate the issue.
The Court stated:
The courts have often discarded the rule
while commenting on crowded dockets and long
delays preceding trial.
Authorities differ on
whether the public interest in efficient judicial
administration is a sufficient ground in and of
itself for abandoning mutuality, but it is clear
that more than crowded dockets is involved. The
broader question is whether it is any longer
tenable to afford a litigant more than one full
7
Because this case does not involve the offensive use
of collateral estoppel, we express no opinion as to whether
Bernhard was correct in its abandonment of mutuality in
both the context of its offensive and defensive use.
12
and fair opportunity for judicial resolution of
the same issue.
The question in these terms
includes as part of the calculus the effect on
judicial administration, but it also encompasses
the concern exemplified by Bentham’s reference to
the gaming table in his attack on the principle
of mutuality of estoppel.[8] In any lawsuit where
a defendant, because of the mutuality principle,
is forced to present a complete defense on the
merits to a claim which the plaintiff has fully
litigated and lost in a prior action, there is an
arguable misallocation of resources.
To the
extent the defendant in the second suit may not
win by asserting, without contradiction, that the
plaintiff
had
fully
and
fairly,
but
unsuccessfully, litigated the same claim in a
prior suit, the defendant’s time and money are
diverted from alternative uses—productive or
otherwise—to relitigation of a decided issue.
And, still assuming that the issue was resolved
correctly in the first suit, there is reason to
be concerned about the plaintiff’s allocation of
resources. Permitting repeated litigation of the
same issue as long as the supply of unrelated
defendants holds out reflects either the aura of
the gaming table or “a lack of discipline and of
disinterestedness on the part of the lower
courts, hardly a worthy and wise basis for
fashioning rules of procedure.” Although neither
judges, the parties, nor the adversary system
performs perfectly in all cases, the requirement
of determining whether the party against whom an
estoppel is asserted had a full and fair
opportunity to litigate is a most significant
safeguard. [Id. at 328-329 (citation omitted).]
In
this
state,
the
Court
of
Appeals
has
expressly
stated that defensive use of collateral estoppel does not
require mutuality.
8
In Knoblauch v Kenyon, 163 Mich App
Philosopher Jeremy Bentham had attacked mutuality of
estoppel “as destitute of any semblance of reason, and as
‘a maxim which one would suppose to have found its way from
the gaming-table to the bench’ . . . .”
Blonder-Tongue,
supra at 322-323 (citations omitted).
13
712; 415 NW2d 286 (1987), plaintiff was convicted of a sexrelated crime.
In his direct appeal from the conviction,
plaintiff claimed that his attorney rendered ineffective
assistance
of
Plaintiff
then
counsel,
sued
the
but
the
conviction
attorney
for
legal
was
affirmed.
malpractice,
essentially asserting the same grounds as those alleged in
his
criminal
appeal.
As
an
affirmative
defense,
the
attorney filed a motion for summary disposition asserting
that collateral estoppel barred the subsequent litigation.
The trial court agreed and granted the attorney’s motion,
and the Court of Appeals affirmed, holding that mutuality
of estoppel was not required where: (1) collateral estoppel
was being asserted defensively and (2) the plaintiff had an
opportunity to litigate the issue in a prior proceeding.
Knoblauch, supra at 725.9
Persuaded by the reasoning of Knoblauch and of the
countless other courts that have adopted a similar test,10
9
This rule has been followed in
of the Court of Appeals. See Alterman
App 422, 424-425; 491 NW2d 868 (1992);
O’Hagan, PC, 173 Mich App 345, 357; 433
10
subsequent decisions
v Provizer, 195 Mich
Schlumm v Terrance J
NW2d 839 (1988).
See, e.g., Adriaanse v United States, 184 F2d 968
(CA 2, 1950); Bruszewski v United States, 181 F2d 419 (CA
3, 1950); Graves v Associated Transport, Inc, 344 F2d 894
(CA 4, 1965); Davis v McKinnon & Mooney, 266 F2d 870 (CA 6,
1959); Federal S&L Ins Corp v Hogan, 476 F2d 1182 (CA 7,
1973); Fisher v Jones, 311 Ark 450; 844 SW2d 954 (1993);
Murphy v Northern Colo Grain Co, 30 Colo App 21; 488 P2d
103 (1971); Aetna Cas & Surety Co v Jones, 220 Conn 285;
596 A2d 414 (1991); Coca-Cola Co v Pepsi Cola Co, 172 A 260
14
we believe that the lack of mutuality of estoppel should
not preclude the use of collateral estoppel when it is
asserted defensively to prevent a party from relitigating
an issue that such party has already had a full and fair
opportunity to litigate in a prior suit.
supported
by
the
Restatement
of
Such a belief is
Judgments.
“A
party
precluded from relitigating an issue with an opposing party
. . . is also precluded from doing so with another person
unless
.
litigate
.
the
.
he
issue
lacked
in
the
full
and
first
fair
action
opportunity
.
Restatement Judgments, 2d, ch 3, § 29, p 291.
.
.
.”
to
1
“A party who
has had a full and fair opportunity to litigate an issue
has been accorded the elements of due process.
There is no
good reason for refusing to treat the issue as settled so
(Del Super, 1934); Ellis v Crockett, 51 Hawaii 86; 451 P2d
814 (1969); Anderson v Pocatello, 112 Idaho 176; 731 P2d
171 (1986); White v Allstate Ins Co, 605 NE2d 141 (Ind,
1992); Pat Perusse Realty Co v Lingo, 249 Md 33; 238 A2d
100 (1968); Home Owners Fed S&L Ass’n v Northwestern Fire &
Marine Ins Co, 354 Mass 448; 238 NE2d 55 (1968); Gammel v
Ernst & Ernst, 72 NW2d 364 (Minn, 1955); Thomas M McInnis &
Associates, Inc v Hall, 318 NC 421; 349 SE2d 552 (1986);
Sanderson v Balfour, 109 NH 213; 247 A2d 185 (1969); Silva
v State, 106 NM 472; 745 P2d 380 (1987); Ettin v Ava Truck
Leasing, Inc, 53 NJ 463; 251 A2d 278 (1969); Posternack v
American Cas Co, 421 Pa 21; 218 A2d 350 (1966); Black Hills
Jewelry Mfg Co v Felco Jewel Industries Inc, 336 NW2d 153
(SD, 1983); Crowall v Heritage Mut Ins Co, 118 Wis 2d 120;
346 NW2d 327 (1984). See also anno: Mutuality of estoppel
as prerequisite of availability of doctrine of collateral
estoppel to a stranger to the judgment, 31 ALR3d 1044, § 4,
pp 1072-1073; 47 Am Jur 2d, Judgments, § 648, pp 54-55; 18
Moore’s Fed Practice (3d ed), Issue preclusion and
collateral estoppel, § 132.04[2][b]-[c][ii], pp 156-162.
15
far as he is concerned other than that of making the burden
of litigation risk and expense symmetrical between him and
his
adversaries.”
circumstances
where
Judgments,
mutuality
p
292,
is
comment
required
b.
and
In
where
collateral estoppel is asserted defensively, the mutuality
requirement only encourages gamesmanship by a plaintiff.11
See n 8.
A party is entitled to his day in court on a
particular issue, and is not entitled to his day in court
against a particular adversary.
31 ALR3d 1044, § 4, p
1068.
The doctrine of collateral estoppel is intended “‘to
relieve
parties
of
the
cost
and
vexation
of
multiple
lawsuits, conserve judicial resources, and, by preventing
inconsistent decisions, encourage reliance on adjudication
. . . .’”
11
Detroit v Qualls, 434 Mich 340, 357 n 30; 454
Because nonparties, such as defendant, receive no
notice of third-party actions and thus are generally
unaware of such actions, we are perplexed as to how
“abandoning
the
mutuality
requirement
under
these
circumstances would . . . reward defendant’s gamesmanship.”
Post at 9 (emphasis added). If plaintiff believed, as the
dissent contends, that defendant, by not requesting to be
joined
in
the
third-party
action,
was
employing
“gamesmanship,” plaintiff had the authority to attempt to
join defendant. MCR 2.206(A)(1). However, because “there
are rarely tactical reasons for refraining from joining all
potential defendants,” we believe that it was plaintiff
who, by choosing not to attempt to join defendant as a
party was employing “gamesmanship” and was planning to use
the instant action, if necessary, “merely [as] a renewal of
[his] previously unsuccessful effort.”
1 Restatement
Judgment, 2d, ch 3, § 29, p 301 reporter’s note. See also
Ritchie v Landau, 475 F2d 151, 156 n 5 (CA 2, 1973).
16
NW2d 374 (1990), quoting Allen v McCurry, 449 US 90; 101 S
Ct 411; 66 L Ed 2d 308 (1980).
By refusing to adopt the
majority’s test, the dissent does nothing to preserve the
underpinnings of collateral estoppel.
require
defendants
to
relitigate
The dissent would
previously
adjudicated
issues;12 it would require the judicial system to employ
scarce resources repeatedly adjudicating the same issue; it
would
increase
the
likelihood
of
inconsistent
decisions
being rendered by the judicial process; it would promote
opportunities for parties to use the judicial process in a
vexatious manner; and it would require defendants to expend
resources relitigating issues.
Each of these effects would
only weaken our judicial process.13
Further,
the
dissent,
at
least
in
part,
apparently
bases its position on the notion that fairness, in the
context
of
defensive
collateral
estoppel,
is
determined
12
Given that there are over sixty years of experience
regarding the defensive use of collateral estoppel in the
absence of mutuality, see Bernhard, supra, the dissent’s
fear that the “full and fair” standard will “open the
Pandora’s box,” causing judicial resources to be spent
litigating whether a prior adjudication was “full and
fair,” appears unfounded. Post at 7 (citation omitted).
13
The test that we set forth today is fully consistent
with
our
understanding
of
collateral
estoppel
as
“strik[ing] a balance between the need to eliminate
repetitious litigation and the interest in affording
litigants a full and fair adjudication of the issues
involved in their particular claims.”
Post at 1.
Such
test serves both these interests without diluting either.
17
only on the basis of symmetry.
Post at 9-10.14
However, as
explained in Bruszewski v United States, 181 F2d 419 (CA 3,
1950),
the
achievement
of
"substantial
justice,"
rather
than symmetry, is the proper measure of fairness in the
context of defensive collateral estoppel:
This second effort to prove negligence is
comprehended by the generally accepted precept
that a party who has had one fair and full
opportunity to prove a claim and has failed in
that effort, should not be permitted to go to
trial on the merits of that claim a second time.
Both orderliness and reasonable time saving
judicial administration require that this be so
unless some overriding consideration of fairness
to a litigant dictates a different result in the
circumstances of a particular case.
The countervailing consideration urged here
is lack of mutuality of estoppel. In the present
suit
[the
plaintiff]
would
not
have
been
permitted to take advantage of an earlier
affirmative finding of negligence, had such
finding been made in [his first suit against a
different defendant]. For that reason he urges
that he should not be bound by a contrary finding
in that case.
But a finding of negligence in
[the plaintiff’s first suit] would not have been
binding against the [defendant in a second suit]
because [that defendant] had no opportunity to
contest the issue there.
The finding of no
negligence on the other hand was made after full
opportunity to [the plaintiff] on his own
election to prove the very matter which he now
14
“[W]e should firmly keep in mind that we are
considering the situation where the [plaintiff] was
plaintiff in the prior suit and chose to litigate at that
time and place.
Presumably, he was prepared to litigate
and to litigate to the finish against the defendant
[involved in the prior suit].
[Accordingly,] there is no
reason to suppose that [the plaintiff] would face either
surprise or unusual difficulties in getting all relevant
and probative evidence before the court in the first
litigation.” Blonder-Tongue, supra at 332.
18
urges a second time. Thus, no unfairness results
here from estoppel which is not mutual.
In
reality the argument of [the plaintiff] is merely
that the application of res judicata in this case
makes the law asymmetrical.
But the achievement
of substantial justice rather than symmetry is
the measure of the fairness of the rules of res
judicata. [Id. at 421.]
IV. CONCLUSION
In an effort to promote the efficient administration
of
justice
and
to
ensure
more
consistent
judicial
decisions, we hold that, where collateral estoppel is being
asserted defensively against a party who has already had a
full and fair opportunity to litigate the issue, mutuality
is not required.
Further, because both requirements of
this test have been satisfied here, we reverse the judgment
of both the trial court and the Court of Appeals, remand
this
case
to
the
trial
court,
and
order
it
to
grant
defendant’s motion for summary disposition.15
Maura D. Corrigan
Elizabeth A. Weaver
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
15
We believe that the instant decision should be given
full retroactive effect because, contrary to the dissent’s
assertion, this decision does not “represent[] a sweeping
change in the law.”
Post at 10.
Rather, there is no
previous decision of this Court that has decided whether
mutuality should apply in the defensive context. See ns 56.
19
S T A T E
O F
M I C H I G A N
SUPREME COURT
FRANK MONAT,
Plaintiff-Appellee,
v
No. 121122
STATE FARM INSURANCE COMPANY,
Defendant-Appellant.
_______________________________
CAVANAGH, J. (dissenting).
In this first-party, no-fault action, defendant seeks
to invoke the doctrine of collateral estoppel to preclude
plaintiff from relitigating an issue decided in plaintiff’s
third-party negligence action.
examine
the
mutuality
We are again called upon to
requirement
of
the
doctrine
of
collateral estoppel as it has been traditionally applied in
Michigan.
Because the majority imprudently departs from
this tradition, I must respectfully dissent.
The
doctrine
of
collateral
estoppel,
also
known
as
issue preclusion, strikes a balance between the need to
eliminate
repetitious
litigation
and
the
interest
in
affording litigants a full and fair adjudication of the
issues
involved
in
their
particular
claims.
Storey
v
Meijer, Inc, 431 Mich 368, 372-373; 429 NW2d 169 (1988).
As a preclusion doctrine, collateral estoppel serves “an
important
function
in
resolving
disputes
by
imposing
a
state of finality to litigation where the same parties have
previously had a full and fair opportunity to adjudicate
their claims.”
541;
533
Nummer v Dep’t of Treasury, 448 Mich 534,
NW2d
250
(1995)
(emphasis
added).
Collateral
estoppel applies when a question of fact essential to the
judgment was actually litigated and determined by a valid
and
final
judgment.
Senior
Accountants,
Analysts
&
Appraisers Ass’n v Detroit, 399 Mich 449, 458; 249 NW2d 121
(1976); Howell v Vito’s Trucking & Excavating Co, 386 Mich
37, 41-42; 191 NW2d 313 (1971).
In addition, Michigan law
requires mutuality of estoppel.
Storey, supra at 373 n 3;
Howell, supra at 41-42; Lichon v American Universal Ins Co,
435 Mich 408, 427; 459 NW2d 288 (1990).
“[M]utuality of estoppel requires that in order for a
party to estop an adversary from relitigating an issue that
party must have also been a party, or privy to a party, in
the
previous
differently,
action.”
Lichon,
“estoppel
is
supra
mutual
if
at
the
427.
one
Stated
taking
advantage of the earlier adjudication would have been bound
by it, had it gone against him.”
(citations omitted).
Howell, supra at 43
Unless both parties in a subsequent
action are bound by a prior judgment, neither party may use
that prior judgment as determinative of an issue in the
subsequent action.
2
Until
today’s
decision,
unquestionably
remained
defendant
not
was
a
the
mutuality
law
in
party
in
the
of
estoppel
Michigan.
Because
third-party
action,
mutuality is absent and collateral estoppel could not be
invoked.
issue
of
Further,
defendant
plaintiff’s
injury
acknowledged
been
decided
that
had
the
unfavorably
to
defendant’s position, it would not have been bound by the
earlier judgment.
Nonetheless, defendant asked this Court
to either abrogate the mutuality requirement or create a
new exception so that it may now use the prior judgment for
its
own
advantage.
defendant’s
request
The
and
majority
joined
eagerly
granted
the
so-called
“modern
of
estoppel
trend.”
For
many
years,
mutuality
was
the
recognized rule, but the rule began to come under fire by
courts in other jurisdictions.
See, e.g., Bernhard v Bank
of America Nat’l Trust & Savings Ass’n, 19 Cal 2d 807; 122
P2d 892 (1942).
mutuality
The modern trend has been to abandon the
requirement
in
whole
or
in
part.
Some
jurisdictions have rejected mutuality depending on whether
collateral estoppel is asserted offensively or defensively.
Other jurisdictions, however, have continued to adhere to
3
the mutuality requirement despite the modern trend.1
Defendant’s arguments in support of yielding to the
modern trend, such as preserving judicial resources, are by
no means novel and have previously been rejected by this
Court.
In fact, this Court has consistently and explicitly
declined the invitation to follow the modern trend.
In
1971, this Court made a conscious decision to resist the
modern
trend
requirement.
and
refused
to
Howell, supra at 43.
abrogate
the
mutuality
This Court stated:
A more fundamental reason for declining
plaintiff's invitation to abandon the requirement
of mutuality is that we are not convinced that to
do so would promote the ends of justice or
increase efficiency in the administration of our
courts. Surely, we must strike a balance between
the competing interests: (a) that the litigant
against whom the doctrine is asserted has had his
day
in
court;
vis-à-vis
[sic]
(b)
that
repetitious and needless litigation which burden
our already overloaded court dockets must be
1
See, e.g., Leon C Baker, PC v Merrill Lynch, Pierce,
Fenner & Smith, Inc, 821 So 2d 158, 165 (Ala, 2001),
quoting McMillian v Johnson, 878 F Supp 1473, 1520 (MD Ala,
1995)(“’It is noteworthy that Alabama has not followed the
trend of abolishing the requirement that parties be
identical, sometimes referred to as the mutuality of
estoppel requirement.’”); EC v Katz, 731 So 2d 1268, 1270
(Fla,
1999)(“This
case
falls
squarely
within
our
traditional requirement that there be mutuality of parties
in order for collateral estoppel to apply defensively.”);
Hofsommer v Hofsommer Excavating, Inc, 488 NW2d 380, 384
(ND, 1992)(“Although the principle of mutuality has been
abandoned in numerous jurisdictions . . . , this court has
applied the mutuality rule as a prerequisite to the
application of collateral estoppel.”); Rawlings v Lopez,
267 Va 4; 591 SE2d 691 (2004)(reaffirming Virginia’s
adherence to the principle of mutuality in the context of
defensive collateral estoppel).
2
avoided. But we need not sacrifice a wellestablished and valuable rule to achieve this
balance.
* * *
In point of fact, the abandonment of the
mutuality doctrine would in many instances create
more
pitfalls
to
orderly
and
efficient
administration of justice. [Id. at 48-49.]
Howell
involved
a
case
of
offensive
collateral
estoppel, but it is evident that the Court was basing its
commitment to the mutuality requirement on larger policy
concerns.
“The
course
of
justice
is
best
served
by
adherence to a long established and definitive rule which
our bench and bar well recognizes rather than permit an ad
hoc
formulation
of
a
unmanageable factors.”
rule
based
Id. at 51.
upon
innumerable
and
As recently as 1990,
this Court expressly reaffirmed its commitment to mutuality
of
estoppel
estoppel.
in
a
case
involving
defensive
collateral
Lichon, supra at 427-428.
Again,
the
arguments
in
support
of
abrogation
have
been duly considered by earlier compositions of this Court.
Despite
these
majority
now
earlier
finds
decisions,
these
rehashed
the
Court’s
arguments
current
persuasive,
finding error where none had been discovered before.
The
doctrine of stare decisis is more than a fad and decades of
precedent
suggests.
cannot
be
readily
discounted
as
the
majority
“This Court has stated on many occasions that
‘[u]nder the doctrine of stare decisis, principles of law
3
deliberately examined and decided by a court of competent
jurisdiction should not be lightly departed.’”
Manistee
Co
Rd
Comm,
452
Mich
354,
365;
550
Brown v
NW2d
215
(1996), quoting Boyd v W G Wade Shows, 443 Mich 515, 525 n
15; 505 NW2d 544 (1993) (citations omitted).
Moreover,
this Court should “’not overrule a decision deliberately
made unless [it] is convinced not merely that the case was
wrongly decided, but also that less injury would result
from overruling than from following it.’”
365, quoting Boyd, supra at 524.
flagrant
or
otherwise,
committed
Brown, supra at
I perceive no error,
by
this
Court
in
our
earlier decisions that specifically declined to follow the
modern trend.
on
this
Like the learned members who previously sat
Court,
I
find
defendant’s
rehashed
arguments
equally unpersuasive.
Nor am I persuaded that this Court should create a new
exception to the mutuality requirement.
noted
several
mutuality
“well-established”
requirement.
Lichon,
This Court has
exceptions
supra
at
428
to
n
the
16.
However, the relationship between plaintiff and defendant
does not fit into one of these recognized exceptions.
For
example, an exception to the mutuality requirement has been
recognized where the liability of one party is dependent on
the culpability of the other party.
Mich
703,
711;
62
NW2d
441
4
(1954).
DePolo v Greig, 338
The
relationship
between plaintiff and defendant as insured and insurer is
simply
not
the
type
of
special
relationship
that
has
traditionally formed the basis of the “well-established”
exceptions.2
With the adoption of the majority’s new formulation,
the fears that this Court expressed in Howell are beginning
to ring true.
This Court stated:
To abandon mutuality and proceed on a “full
and fair hearing” standard would open the
Pandora’s box of problems rhetorically posed by
Professor Semmel [Collateral estoppel, mutuality
and joinder of parties, 68 Col LR 1457, 1469
(1968)]:
“The real problem is what standard the court
in
the
second
action
should
apply
if
it
undertakes to determine whether the first action
was litigated ‘with full vigor and opportunity to
be heard.’ Does a defendant in a small property
damage claim meet the test?
If he knows or has
reason to fear that an adverse decision will be
utilized by nonparties to the first action, he
may very well proceed with greater vigor, but
there is no assurance of this since insurance
companies currently seek to dispose of property
damage claims with the minimum of litigation
expense.
As the dissent in B. R. DeWitt Inc v
Hall [19 NY2d 141, 148-149; 225 NE2d 195; 278 NYS
2d 596 (1967)] noted, how do we treat cases where
the defendant has different liability insurers
for personal injury claims and property damage
claims?
How can a judge evaluate the vigor of
2
I acknowledge that the Court of Appeals has taken
upon itself to create new exceptions to the mutuality
requirement.
See, e.g., Alterman v Provizer, Eisenberg,
Lichtenstein & Pearlman, PC, 195 Mich App 422; 491 NW2d 868
(1992).
However, as mentioned above, I am not convinced
that this Court should create a new exception under these
circumstances, nor do I express an opinion relating to any
exceptions created by lower courts.
5
litigation in a case in which he did not sit?
How can he weigh the difficulty a defendant faced
by being forced to litigate in one jurisdiction
rather than another? How did the burden of proof
or applicable presumption affect the result?”
[Howell, supra at 51-52 n 13.]
The majority insists that the numerous factors set forth by
the Restatement will assist in determining whether an issue
is fully and fairly litigated.
The majority further notes
that “we do not believe that the factors set forth in the
Restatement
are
‘innumerable
or
unmanageable
.
.
.
.’”
Ante at 9 n 4.
Thus, under the majority’s rationale, the
fears
by
detailed
the
Howell
Court
are
necessarily
unfounded.
In
concludes
its
next
that
breath,
however,
plaintiff’s
no-appeal
the
majority
agreement
is
then
not
a
situation covered by the illuminating factors set forth by
the Restatement and, therefore, the majority has to resort
to a waiver analysis to reach its ultimate conclusion that
plaintiff fully and fairly litigated the injury issue in
the third-party action.
The majority acknowledges that the
full and fair opportunity analysis is not an easy endeavor
and courts should “proceed cautiously.”
a
practical
resources
will
matter,
be
opportunity prong.
spent
however,
Ante at 7 n 3.
considerable
litigating
the
full
As
judicial
and
fair
Thus, the facts of this case illustrate
the idea that judicial economies will not be achieved under
6
the
majority’s
new
approach,
an
idea
previously
acknowledged by the Howell Court.
Further,
abandoning
the
mutuality
requirement
under
these circumstances would undermine the purpose of the rule
and
reward
defendant’s
gamesmanship.3
Rather
than
continuing to pay benefits under the policy and intervene
in the third-party action, defendant elected to stop making
payments, thereby compelling plaintiff to expend judicial
resources
by
consciously
plaintiff
bringing
made
were
this
found
a
first-party
decision
to
be
action.
because
injured
it
in
Defendant
knew
the
that
if
third-party
action, it would not be bound by that judgment and could
relitigate the injury issue.
Alternatively, if plaintiff
was not found to be injured, defendant could then assert
the defense of collateral estoppel, cast plaintiff in a
negative light, and play the odds that this Court would
step in line and abrogate the mutuality requirement.
majority
willingly
conformed
and
even
rewarded
The
such
maneuvering by inexplicably giving defendant the benefit of
the new rule of law.
3
The majority asserts that first-party, no-fault
insurers, as nonparties, are generally unaware of thirdparty actions involving their insureds.
Yet, I find it
telling that this defendant stopped paying benefits a short
time after plaintiff filed the third-party action rather
than simply denying plaintiff’s claim in the first place.
7
In
general,
complete
“’judicial
retroactive
decisions
effect.’”
are
to
Michigan
be
given
Educational
Employees Mut Ins Co v Morris, 460 Mich 180, 189; 596 NW2d
142 (1999) (citations omitted).
This Court, however, has
considered prospective or limited retroactive application
where
well-established
law
has
been
changed.
Id.
In
resolving the “retroactive-prospective dilemma,” this Court
weighs “’(1) the purpose to be served by the new rule, (2)
the extent of reliance on the old rule, and (3) the effect
of retroactivity on the administration of justice.’”
at
190
(citations
omitted).
The
majority
represents a sweeping change in the law.
Id.
opinion
Until today’s
decision, mutuality remained the law in Michigan.
In light
of the bench and bar’s heavy reliance on the mutuality
requirement, mutuality’s storied history, and the notion
that
the
new
rule
is
unlikely
to
achieve
its
stated
purpose, I am unclear with regard to how the majority can
justify
applying
the
rule
of
law
announced
in
today’s
decision to this particular defendant.
In
sum,
I
am
unwilling
to
abrogate
the
mutuality
requirement in the application of collateral estoppel.
I
remain unconvinced that the judicial economies the majority
claims
are
achieved
by
abrogation
are
sufficient
to
override concerns about the fairness afforded to litigants.
The
mutuality
requirement
already
8
strikes
an
evenhanded
balance between these competing interests.
Accordingly, I
respectfully dissent.
Michael F. Cavanagh
Marilyn Kelly
9
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