Koos v. Roth

602 P.2d 1128 (1979)

43 Or.App. 383

George KOOS and Agnes V. Koos, Respondents, v. Kenneth ROTH, Appellant.

No. 50967; CA 12908.

Court of Appeals of Oregon.

Argued and Submitted August 22, 1979.

Decided November 26, 1979.

*1129 Paul D. Clayton, Eugene, argued the cause for appellant. With him on the briefs was Luvaas, Cobb, Richards & Fraser, P.C., Eugene.

Dean M. Quick, Albany, argued the cause for respondents. With him on the brief was Weatherford, Thompson, Brickey & Powers, P.C., Albany.

Before JOSEPH, P.J., and LEE and RICHARDSON, JJ.

JOSEPH, Presiding Judge.

Plaintiffs sued for property damages caused in August, 1977, by a field burning fire in Linn County that escaped from defendant's land, crossed adjoining property and spread onto plaintiffs' land. On the day of trial plaintiffs amended their pleadings to add a cause of action based on strict liability and also submitted a supplemental complaint pleading collateral estoppel arising out of a previous lawsuit. The trial court accepted those pleadings over objection by defendant as to their timeliness. The court found that defendant's strict liability was conclusively determined in the prior litigation, and it directed a verdict for plaintiffs. The jury heard evidence only on the measure of damages.

Defendant assigns as error: (1) the court's granting plaintiffs permission to file untimely amended pleadings adding a new cause of action, (2) the permission to file untimely supplemental pleadings raising collateral estoppel and (3) the finding of collateral estoppel. It is only necessary to discuss the third assignment.

Defendant was a party to a previous lawsuit arising out of the same field burning incident brought by neighbors owning property adjoining both that of plaintiffs and defendant. In the prior lawsuit, the trial court ruled that strict liability governed and directed a verdict for plaintiffs. The parties then settled the case, and the matter was dismissed without the jury having deliberated upon it.

The third assignment rests upon three arguments: (1) the ruling in the prior case was not a final judgment on which collateral estoppel could be predicated; (2) the record in the present case insufficiently established the basis for the decision in the prior action for purposes of collateral estoppel; and (3) it was unfair to impose collateral *1130 estoppel based on a manifestly erroneous extension of the doctrine of strict liability to the activity of field burning.

The first two arguments dispose of the case, so we need not reach the third. A final judgment is a necessary basis for the assertion of collateral estoppel as a bar to relitigation of an issue already tried. Restatement of Judgments, § 41 (1942) states: "The rules of res judicata[1] are not applicable where the judgment is not a final judgment." Comment e to that section states also that a judgment which is not final is not conclusive "by way of collateral estoppel between the parties in a subsequent action on a different cause of action." In McAllister v. Charter First Mortgage, Inc., 279 Or. 279, 285, 567 P.2d 539, 542 (1977), the Oregon Supreme Court stated:

"Before res judicata applies, the prior lawsuit must have ended in an `adjudication of issues which have culminated in a final decree.' Huszar v. Certified Realty Co., 272 Or. 517, 523, 524, 538 P.2d 57 (1975). See also, R.L.K. and Co. v. Tax Commission, 249 Or. 603, 608-09, 438 P.2d 985 (1968). In the case at bar there is no evidence that any final judgment or prejudicial dismissal was entered in respect to the defendant."

We think the same rule applies to the related principle of collateral estoppel. Wolff v. Du Puis, 233 Or. 317, 321, 378 P.2d 707 (1963),[2] indicates that an issue of fact on which collateral estoppel is predicated should be "determined by a valid final judgment." We see no reason why the same should not be true where an issue of law is claimed to have been conclusively determined in previous litigation.

The burden is on the party asserting collateral estoppel to prove its elements. State Farm v. Century Home, 275 Or. 97, 104, 550 P.2d 1185 (1976). The record discloses no evidence that any final judgment or dismissal with prejudice was entered in the first lawsuit. Plaintiffs did not controvert the statement of defendant's counsel at trial that no final order was entered in the prior lawsuit. The correct procedure to assert collateral estoppel is to place into evidence the prior judgment and appropriate portions of the record. State Farm v. Century Home, supra at 104, 550 P.2d 1185. Here we have only the statements of counsel in the record that the matter was "dismissed," without further explanation.

An order of dismissal without prejudice adjudicates nothing, Huzar v. Certified Realty Co., supra, 272 Or. at 523, 538 P.2d 57, and would not lend itself to a later assertion of res judicata, Annotation, 149 A.L.R. 557 (1944), or collateral estoppel. Even were there a judgment based on a final order dismissing the suit with prejudice, the question would remain on remand whether such a judgment "actually and necessarily included," and was therefore determinative of, defendant's strict liability. See ORS 43.160;[3]Lewis v. International Business Machines Corp., 393 F. Supp. 305 (D.C.Or. 1974). Where the first judgment was based on a dismissal with prejudice after settlement by the parties, it may be unclear whether or not the judgment is actually determinative on the issue in question. For example, the settlement may be a compromise on the issue of liability, which defendant continues to disclaim.[4] Collateral estoppel might also be inappropriate when the prior lawsuit has been settled in those

"* * * instances in which the party to the first case, at the time of that *1131 litigation, does not realize that subsequent litigation is in the offing. Depending upon the circumstances, this might be the basis for a valid argument that it would be unfair to preclude him from relitigating the issue." Bahler v. Fletcher, 257 Or. 1, 11, 474 P.2d 329, 334 (1970).

Assessment of such considerations, in the light of all the circumstances, can only be made in each case on the basis of an adequate record of the prior proceeding and of the facts surrounding its settlement. Those things were not present here.

Reversed and remanded.

NOTES

[1] The Restatement defines "res judicata" to include collateral estoppel. Introductory Note, §§ 41-77.

[2] Wolff v. Du Puis, 233 Or. 317, 378 P.2d 707 (1963) was overruled insofar as it impliedly required mutuality for the application of preclusion, Bahler v. Fletcher, 257 Or. 1, 21, 474 P.2d 329 (1970), but is still valid authority as to the finality of a prior judgment for purposes of collateral estoppel.

[3] ORS 43.160:

"That only is determined by a former judgment, decree or order which appears upon its face to have been so determined or which was actually and necessarily included therein or necessary thereto."

[4] Although there are no Oregon cases on this point, there is California authority for the proposition that a compromise settlement without trial, where liability continues to be disclaimed, should not preclude a later trial on the merits where a different party is involved. Clovis Ready Mix Co. v. Aetna Freight Lines, 25 Cal. App. 3d 276, 285, 101 Cal. Rptr. 820 (1972). In Lea v. Shank, 5 Cal. App. 3d 964, 85 Cal. Rptr. 709, modified on other grounds, 86 Cal. Rptr. 515 (1970), the court pointed out that the settlement in that case, although made after a jury finding of negligence, might have been made upon a continued denial of negligence by defendant "at a stage in the proceedings when his right to attack the jury finding had not been exhausted." Supra at 972, 85 Cal. Rptr. at 713. The court went on to say:

"While in most cases such a judgment based upon a written dismissal by the plaintiff may be the result of a settlement between the parties, it would be necessary in each instance to go into the circumstances to see whether there had been a compromise on the question of liability. Such a judgment has not the same effect as a stipulated judgment in favor of the plaintiff for the amount of the agreed settlement. * * * While the dismissal with prejudice given for a consideration amounts to a retraxit as between the parties, it is impossible to see why it should on the face of it give to a stranger to the action the right to assert a collateral estoppel against the same defendant in another action."