PUBLISHED OPINION
Case No.: 95-1730
Complete Title
of Case:
MARTEN TRANSPORT, LTD.,
Plaintiff-Appellant,
v.
RURAL MUTUAL INSURANCE
COMPANY,
Defendant-Respondent.
Submitted on Briefs: October 18, 1995
Oral Argument:
COURT COURT
OF APPEALS OF WISCONSIN
Opinion Released: December 19, 1995
Opinion Filed: December
19, 1995
Source of APPEAL Appeal from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Marathon
(If "Special", JUDGE: Raymond F. Thums
so indicate)
JUDGES: Cane,
P.J., LaRocque and Myse, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn behalf of
plaintiff-appellant, the cause was submitted on the briefs of Jeffrey Jay
Strande of Terwilliger, Wakeen, Piehler & Conway, S.C. of
Wausau.
Respondent
ATTORNEYSOn behalf of
defendant-respondent, the cause was submitted on the brief of Mark A. Seidl
of Mark A. Seidl, S.C. of Wausau.
|
COURT OF APPEALS DECISION DATED AND RELEASED DECEMBER 19, 1995 |
NOTICE |
|
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-1730
STATE
OF WISCONSIN IN COURT OF
APPEALS
MARTEN TRANSPORT,
LTD.,
Plaintiff-Appellant,
v.
RURAL MUTUAL INSURANCE
COMPANY,
Defendant-Respondent.
APPEAL from a judgment
of the circuit court for Marathon County:
RAYMOND F. THUMS, Judge. Reversed
and cause remanded.
Before Cane, P.J.,
LaRocque and Myse, JJ.
LaROCQUE, J. Marten Transport, Ltd., a settling
defendant in an earlier Illinois negligence action, appeals a summary judgment
that dismissed its Wisconsin contribution action against Rural Mutual Insurance
Company. Marten seeks contribution on
grounds that Rural's insured was a joint tortfeasor in the auto accident that
injured Jeanna Teske in Illinois. The
circuit court dismissed Marten's contribution action on a theory that Illinois
law applies because Teske brought her underlying negligence claim in that
state, and an Illinois statute compels a defendant's contribution claim be made
in the underlying tort action.[1] Because the forum state's law governs the
question of Marten's right to a remedy, and Wisconsin law permits an action for
contribution separate from the underlying tort action, and because dismissal of
the Illinois negligence action has no res judicata effect upon Marten's
action for contribution, the judgment of dismissal is reversed and the matter
remanded.
Jeanna Teske was injured
while a passenger in a vehicle operated by her husband, Wayne Teske, near
Rockford, Illinois, when the Teske vehicle collided with a truck owned and
operated by Marten. Teske named Marten
and its driver in a negligence complaint filed in Illinois. Prior to an appearance, Teske received
$49,000 from Marten in exchange for a release and a dismissal of the
lawsuit. Marten, a Wisconsin
corporation, brought the current direct action against Rural, a Wisconsin
insurance corporation, as the auto liability insurer of Teske's husband,
allegedly a joint tortfeasor. The
Teskes are also Wisconsin residents.
Rural first argues that
even if Wisconsin law applies, the res judicata rationale of A.B.C.G.
Enters. v. First Bank Southeast, 184 Wis.2d 465, 515 N.W.2d 904 (1994),
directs the legal conclusion that Marten's failure to bring its contribution action
as a third-party claim in Jeanna's Illinois action is fatal. Unless the res judicata doctrine bars
Marten's action, it is firmly established Wisconsin law that a contribution
claim is permissive and not mandatory. See
Weina v. Atlantic Mut. Ins. Co., 177 Wis.2d 341, 346, 501 N.W.2d
465, 467 (Ct. App. 1993). The doctrine
of res judicata provides that a final judgment is conclusive in all subsequent
actions between the same parties as to all matters that were litigated or that
might have been litigated in the former proceedings. A.B.C.G., 184 Wis.2d at 472-73, 515 N.W.2d at
906. We hold that neither A.B.C.G.
nor the other cases cited by Rural apply under the circumstances of this
case.
In A.B.C.G.,
our supreme court recognized a common law compulsory counterclaim rule founded
upon res judicata principles as an exception to the general permissive
counterclaim statute. In that case, it
applied the rule to bar an independent action for damages following the entry
of a default judgment in an earlier lawsuit involving the same
transaction. The "narrowly
defined" compulsory counterclaim rule applies where the present claim, if
successfully litigated, would nullify the prior judgment or impair the rights
established in the initial action. Id.
at 472-78, 515 N.W.2d at 906-08.[2]
As noted, this is not
the situation here. Marten's claim for
reimbursement from the alleged joint tortfeasor's insurer does nothing to
nullify or impair the rights of Jeanna Teske to the $49,000 settlement paid her
for her injuries. This fact alone
sufficiently distinguishes the exception to the permissive nature of
counterclaims recognized in A.B.C.G.
Apart from the
compulsory counterclaim rule, Rural maintains that the circumstances of this
case are analogous to those used to invoke res judicata principles in Great
Lakes Trucking Co. v. Black, 165 Wis.2d 162, 477 N.W.2d 65 (Ct. App.
1991). We conclude that Great
Lakes is not applicable here.
Great
Lakes first recognized that a stipulation to settle pending litigation
in the initial action may constitute a judgment for purposes of res judicata
under proper circumstances. Id.
at 168-69, 477 N.W.2d at 67. In that
case, after the issue was joined, the court approved a settlement. The approval settled a lawsuit brought by an
insurance company to collect premiums due under a contract with a trucking
firm. In the subsequent action, the
trucking firm sued the insurance company and its agent, alleging various causes
of action for damages arising out of the same contract underlying the initial
claim for premiums due.
There are numerous
critical distinctions between Great Lakes and the facts of the
dispute here. First, there is serious
doubt that the precipitous settlement of a lawsuit prior to an appearance by
the defendant and prior to the joining of the issues constitutes a judgment for
res judicata purposes. The doctrines of
collateral estoppel and res judicata are founded upon principles of fundamental
fairness. Desotelle v.
Continental Cas. Co., 136 Wis.2d 13, 21, 400 N.W.2d 524, 527 (Ct. App.
1986). These doctrines are designed to
balance the need to bring litigation to a final conclusion and every party's
right to have a judicial determination made as to their contentions. Id. These doctrines, however, should not be used to deprive a party
of the opportunity to have a full and fair determination of an issue. Id. at 22, 400 N.W.2d at
527. We question whether it is fair to
bar a contribution claim against an alleged joint tortfeasor and his insurer
when the initial action is settled before any responsive pleadings and before
the issues are joined.
Moreover, even assuming
for the sake of argument that the initial settlement was a
"judgment," there is a fallacy in Rural's logic concerning the
necessary identity of parties in the two actions. Rural reasons that if Marten had joined the alleged joint
tortfeasor, his negligence could have been litigated in the Illinois
action. Rural concludes:
"Certainly, as husband and wife, Jeanna Teske and Wayne Teske are
privies," and therefore res judicata applies.
While either party to
the Illinois action could have joined the joint tortfeasor, neither did
so. Further, Rural is wrong in
contending that the Teskes were in privity in the personal injury action. Wayne's only connection with his wife's
claim is that he is now alleged to have been a cause of her injuries and
therefore liable as a tortfeasor. Under
these circumstances, the absence of either Wayne or his insurer in the Illinois
action negates the application of res judicata to the Illinois
"judgment."
Rural also contends,
however, that we should apply Illinois law to resolve the apparent discrepancy
between Wisconsin and Illinois in the mandatory or permissive statutory
conflict over when to file a contribution claim. While we agree that the two state's laws apparently conflict,
because the issue is one of procedure or remedy, Wisconsin law applies. Jaeger v. Jaeger, 262 Wis. 14,
18, 53 N.W.2d 740, 742 (1952). As noted
earlier, in Wisconsin an action for contribution may be, but need not be,
brought in the underlying tort action. Weina
v. Atlantic Mut. Ins. Co., 177 Wis.2d 341, 346, 501 N.W.2d 465, 467
(Ct. App. 1993). This does not appear
to be the law in Illinois under its statutory Contribution Act. See supra note 1.
The general rule,
however, is that the law of the forum, that is, the law of the place where
relief is sought, governs matters of procedure or remedy:
Matters
of procedure, or, as sometimes stated, remedies or remedial rights, are
governed by the law of the forum, that is, the law of the place where relief is
sought, without regard to the domicil of either the plaintiff or the defendant,
or of the law of the state or country in which the wrong was committed or the
contract was made or breached.
16 Am. Jur. 2d Conflict of Laws
§ 118 at 185-86 (1979) (footnotes omitted).
Wisconsin case law is in
accord:
It is
clear that the law of the forum (Wisconsin) governs all matters relating to the
remedy, the conduct of the trial, and the rules of evidence.
Jaeger, 262
Wis. at 18, 53 N.W.2d at 742.
The American Law
Institute is also in accord:
A
court usually applies its own local law rules prescribing how litigation shall
be conducted even when it applies the local law rules of another state to
resolve other issues in the case.
Restatement (Second) of Conflicts of Laws
§ 122 at 349-50 (1971).
Rural misreads the
following passage in support of its contention that the issue in this case is
substantive:
[W]ith
regard to the right of one joint tortfeasor to recover contribution from
another joint tortfeasor the prevailing view is that the right is substantive,
rather than remedial, in nature, and that therefore it is governed by the law
of the place of the tort and not that of the forum.
18 Am. Jur. 2d Contribution
§ 85 at 92 (1985).
The quoted passage has
reference to the substantive law of contribution itself and not the law
controlling the method by which that substantive law is enforced. Because we conclude that the question when a
contribution action may be brought is remedial or procedural and subject to the
law of the forum, we need not apply the substantive choice of law
"dominant interest" or "grouping of contacts" method of
analysis adopted by our supreme court in Wilcox v. Wilcox, 26
Wis.2d 617, 133 N.W.2d 408 (1965), and Conklin v. Horner, 38
Wis.2d 468, 157 N.W.2d 579 (1968).
The summary judgment dismissing
Marten's contribution action is reversed, and the cause remanded to the circuit
court for further proceedings on the merits.
By the Court.—Judgment
reversed and cause remanded.
[1] The Illinois Supreme Court interpreted the Illinois Contribution Act as a mandatory counterclaim provision, and a party seeking contribution who fails to plead the claim is barred from asserting it in a separate action later. Laue v. Leifheit, 473 N.E.2d 939, 941-42 (Ill. 1984). This construction has also been applied by the Illinois Court of Appeals to bar a contribution claim even where the underlying claim has been settled prior to trial. Lesnak v. City of Waukegan, 484 N.E.2d 1285 (Ill. App. 1985). The Act provides in part: "A cause of action for contribution among joint tortfeasors may be asserted by a separate action before or after payment, by counterclaim or by third-party complaint in a pending action." Ill. Rev. Stat ch. 70, para. 305 (1983).
[2]
Apart from Marten's contentions that the Illinois settlement was a
judgment, and the further questions as to the necessary identity of parties and
an identity of causes of action in Marten's lawsuit against Rural, the A.B.C.G.
rule has no application here simply because Marten's contribution action, if
successful, would do nothing to nullify or impair Jeanna Teske's award for her
injuries. See A.B.C.G. Enters. v.
First Bank Southeast, 184 Wis.2d 465, 515 N.W.2d 904 (1994). Thus, Rural fails to meet this explicit
limitation of the A.B.C.G. rule.
In A.B.C.G., a bank had earlier acquired a foreclosure judgment against the mortgagor. The mortgagor then commenced an independent action seeking compensatory damages and other relief on grounds that the bank's improprieties had caused the mortgagor to default on its mortgage agreements and, by way of foreclosure, lose its interest in the properties. Id. at 471-72, 515 N.W.2d at 906. A.B.C.G. unquestionably holds that to trigger res judicata principles and mandate the counterclaim, a showing is necessary that the new action would nullify the prior action or impair rights established in the initial action. Id. at 480, 515 N.W.2d at 910.