For a lot of newer lawyers, res judicata is little more than one of those Latin terms they learned in law school to impress their friends. But in the context of auto law, the doctrine can bring a swift end to complicated litigation, for better or worse.
Res judicata isn’t a legal doctrine that most lawyers have to work with very often. A single lawsuit generally resolves all of a civil litigator’s issues. Except when it comes to auto accidents.
Res Judicata in Auto Accident Cases
Michigan’s no-fault auto insurance law creates a two-step process in any serious auto accident that involves two separate lawsuits: a First Party claim against the driver’s own insurance company, and a Third Party lawsuit.
Third party claims can be brought against the at-fault driver, or against the person’s insurance company if he or she has opted to purchase uninsured or underinsured motorist coverage. Sometimes, these cases are consolidated into one case with one trial and one jury. But more often, the First Party claim is resolved first. That opens up a chance for res judicata to quickly resolve the Third Party action.
Barnes V OrmondV ORMOND
That is exactly what happened in the unpublished Michigan Court of Appeals case, Barnes v Ormond. The plaintiff in that case, Crystal Barnes, was hit when defendant Angela Ormond ran a red light and hit the 2004 Chevrolet Cavalier she was driving.
Barnes owned the Cavalier jointly with her mother, Joyce Burton, who was medically unable to drive. The two lived together as well. Another person, Richard Huling, who was not a relative helped Burton with transportation.
Initially the vehicle was insured by Allstate Insurance, but that policy lapsed. Then Huling purchased a policy from State Farm to cover the vehicle.
Uninsured Motorist Coverage for Uninsured Drivers
In the First Party case, State Farm filed a motion for summary disposition arguing that the plaintiff wasn’t entitled to benefits because she was not covered by Huling’s insurance policy on the vehicle. Ordinarily, an injured motorist can collect first party benefits from her own insurance policy, that of a resident relative, or the policy of the owner of the vehicle.
In this case, Barnes and Barton didn’t have a policy, Huling wasn’t an owner, and Barnes didn’t live with Huling. That meant Barnes was operating the vehicle without no-fault insurance, and was ineligible for any no-fault benefits. The trial court granted State Farm’s motion and dismissed her First Party case.
Res Judicata in Third Party No-Fault Actions
The trouble for Barnes wasn’t over. After her First Party case was dismissed, Ormond, the at-fault driver, and State Farm filed another motion, claiming she wasn’t entitled to uninsured/underinsured motorist (UM/UIM) benefits either. They argued that the plaintiff’s claim was barred by res judicata because the issue of coverage had already been decided in the First Party case. She shouldn’t get more than one bite at the apple. The court agreed.
Res judicata prevents multiple suits litigating the same cause of action. In deciding whether the second suit is barred, courts must consider whether:
- The first action was decided on the merits (rather than due to procedural errors);
- Both actions involve the same parties (or their successors in interest); and
- The second matter was or could have been resolved in the first lawsuit.
The court quoted Adair v State of Michigan:
“This Court has taken a broad approach to the doctrine of res judicata holding that it bars not only claims already litigated, but also every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not.“
That case laid out two tests for res judicata cases:
- The Same Evidence Test: Where the same facts or evidence is needed to support both lawsuits; and
- The Transactional Test: Where different legal theories arise out of the “same group of operative facts.”
Relying on the Transactional Test, the court found that res judicata applied against Barnes. The original lawsuit was decided on the merits through a motion for summary disposition under MCL 2.116(C)(10). Barnes and State Farm were both involved with the first suit. Most importantly, the court held that both lawsuits hinged on the same crucial question: whether Huling could be considered an owner of the vehicle.
Regardless of whether this panel of the Court of Appeals thought the first trial court decided that issue correctly, Barnes’ remedy was to appeal that decision. Because she didn’t, res judicata prohibited her from relitigating the issue in her Third Party suit.
Advising Your Auto Accident Clients
Sometimes it is impossible to avoid res judicata challenges. Particularly when medical providers file separate cases to collect benefits, you may not have control over all the issues decided in your case. Other times, a judge may make a decision you disagree with.
As a trial attorney, it is crucial for you to explain these consequences to your client. He or she may not understand how their two lawsuits interact or the effect of one decision on the other. Whether res judicata works in your favor, or against you, make sure your client knows the consequences of what has happened in time to file a timely appeal.
David Christensen is an auto accident attorney for Christensen Law in Southfield, Michigan. He has taken on the auto insurance industry for 20 years, making sure car crash victims get the coverage they need. If your client is facing a challenging no-fault case, contact Christensen Law for a referral today.