American States Insurance v. Walker

477 S.E.2d 360, 223 Ga. App. 194, 96 Fulton County D. Rep. 3711, 1996 Ga. App. LEXIS 1107
CourtCourt of Appeals of Georgia
DecidedOctober 15, 1996
DocketA96A1052
StatusPublished
Cited by15 cases

This text of 477 S.E.2d 360 (American States Insurance v. Walker) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American States Insurance v. Walker, 477 S.E.2d 360, 223 Ga. App. 194, 96 Fulton County D. Rep. 3711, 1996 Ga. App. LEXIS 1107 (Ga. Ct. App. 1996).

Opinion

Smith, Judge.

This case arises out of an automobile collision between a car owned by Robert Smith and driven by Terry Walker and a vehicle driven by James Waddell. In a previous action, Smith brought suit against Walker to recover property damage to his car. In his complaint, Smith alleged that Walker was operating the car without permission. Walker filed no answer, and a default judgment was entered in that suit.

Waddell and his wife then brought an action against Smith and Walker for personal injuries and loss of consortium. The Waddells served their uninsured motorist insurance carriers, Regal Insurance Company and Southern General Insurance Company, and the insurers answered in their own names. Southern General also filed a cross-claim against Walker. Walker did not file an answer, and the action went into default as to him. The parties stipulated their consent to opening the default as to Walker, and the trial court permitted the default to be opened. 1

Attorneys for the UM carriers, acting in Walker’s behalf, then filed an answer in Walker’s name. They also filed, in Walker’s name, a third-party complaint against Smith’s liability insurance carrier, American States Insurance Company, seeking a declaration of coverage and a defense in the personal injury suit brought by the Wad-dells. 2 In the third-party action, Walker claimed he was entitled to coverage under Smith’s policy because he was a permissive driver. American States answered and moved for summary judgment on the ground that the issue raised in the third-party complaint had been decided adversely to Walker in the prior property damage suit, and Walker was therefore estopped to relitigate it.

The trial court severed the third-party action from the underlying personal injury proceeding, and the third-party complaint proceeded to trial before a jury. American States moved for a directed verdict at the close of the third-party plaintiff’s case and again at the *195 close of evidence. The jury returned a special verdict, finding in its answer to a special interrogatory that Terry Walker had a reasonable belief that he was entitled to use Robert Smith’s car. Final judgment was entered thereon, and American States’ motion for judgment notwithstanding the verdict or for a new trial was denied. This appeal ensued.

1. American States raises four enumerations of error, but the central issue in this appeal is whether collateral estoppel applies to preclude litigating in the third-party declaratory judgment action the issue of whether Walker believed he had permission from Smith to use the car. We hold that it does, and we reverse the judgment.

(a) Collateral estoppel precludes the relitigation of issues “already adjudicated between the parties or their privies in a prior action.” (Citations and punctuation omitted.) Block v. Woodbury, 211 Ga. App. 184, 185 (1) (438 SE2d 413) (1993). No question exists that the issue of whether Walker had permission was “adjudicated” in the prior action. “A judgment by default properly entered against parties sui juris operates as an admission by the defendant of the truth of the definite and certain allegations and the fair inferences and conclusions of fact to be drawn from the allegations of the declaration. Conclusions of law, and facts not well pleaded and forced inferences are not admitted by a default judgment.” (Citations and punctuation omitted.) Stroud v. Elias, 247 Ga. 191, 193 (1) (275 SE2d 46) (1981). Smith’s complaint in the prior case expressly alleged that Walker did not have permission to drive the car.

(b) We agree with American States that this suit also involves the same parties or their privies because American States, as Smith’s insurer, stands in his shoes in this action. Southern Gen. Ins. Co. v. Nat. Union Fire Ins. Co. &c., 218 Ga. App. 400 (461 SE2d 574) (1995). Even were that not true, however, the modern trend in applying the doctrine of collateral estoppel is to restrict the privity requirement to the party against whom the plea is asserted. Green v. Thompson, 208 Ga. App. 609, 610 (431 SE2d 390) (1993). In this case, it is being asserted against Walker, who is bound by the judgment in the prior action.

(c) Walker correctly asserts that in order to preclude relitigation, this issue must also have been essential to the prior judgment. Kent v. Kent, 265 Ga. 211 (1), n. 2, 212 (452 SE2d 764) (1995). Viewing only the bare pleadings in the prior action, it would seem, as urged by Walker, that lack of permission was not essential to the judgment in the prior action. From the face of the pleadings, it appears that the only essential allegations in that action between Smith and Walker were those of negligence, proximate cause, and the amount of property damage.

The record in this case reveals, however, that the prior action *196 was not simply an action on a claim for property damage between Smith and Walker. As acknowledged by Walker’s own attorney, that action was in fact a subrogation action against Walker prosecuted by Smith’s insurer, American States. The allegation that Smith did not give Walker permission to drive his car was .essential to protect American States’ subrogation rights against Walker, and it was purposefully included in the allegations of the complaint for that reason.

Moreover, when the prior judgment is a default judgment it will almost always be difficult, if not impossible, to determine in retrospect which allegations of the unanswered complaint were “essential.” Notice pleading does not require that the plaintiff elaborate on the reasons for, the essential nature of, or the necessity for the particular allegations included in the complaint. We are deprived of any trial testimony to flesh out the “bones” of the allegations in the complaint and permit us to determine which of those allegations were “essential.” As a result, it could be argued reasonably that the requirement that issues be “essential” to the judgment in order to preclude relitigation may not have application to prior judgments by default. But we need not decide so broad a question here. Under the circumstances in this case, given that the prior judgment was by default and that the issue of permission was necessary to preserve the insurer’s subrogation rights, we hold that the allegation that Walker lacked permission was essential to the prior judgment. It may not be relitigated in this action.

(d) Contrary to Walker’s assertion, no material facts have changed, thereby precluding the application of the doctrine of collateral estoppel. A prior judgment binds only as to facts in issue and events existing at the time of the prior judgment, and it does not prevent relitigating an issue if in the interim material facts have changed, altering the relations or rights of the litigants. King v. Plummer, 196 Ga. App. 711, 712 (1) (397 SE2d 5) (1990). The material facts in this case occurred on the date of the collision. The Wad-dells’ filing of an action seeking damages for personal injury is not a new event that alters the relations of these litigants; it depends upon the same operative facts. See generally Caswell v. Caswell, 162 Ga. App. 72 (290 SE2d 171) (1982).

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Bluebook (online)
477 S.E.2d 360, 223 Ga. App. 194, 96 Fulton County D. Rep. 3711, 1996 Ga. App. LEXIS 1107, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-states-insurance-v-walker-gactapp-1996.