Opinion
Editorial Note:
This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA9 Rule 36-3 regarding use of unpublished opinions)
Argued and Submitted Feb. 2, 1988.
Appeal from the United States District Court for the District of Alaska; H. Russell Holland, District Judge, Presiding.
D.Alaska
AFFIRMED.
Before FLETCHER and BRUNETTI, Circuit Judges, and LLOYD D. GEORGE, District Judge.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.Rule 36-3.
Ronald and Nancy Morrison's home was totally destroyed by a plane crash. The plane was owned by Avi-Truck, Inc., leased by Trans-Northern Aleutian, Inc. (TNA), which operated the plane, and insured by Excess Insurance Company. The district court granted summary judgment in favor of Excess, holding the insurance policy did not cover damages for the destruction of the Morrison home. The Morrisons appeal this ruling.
Allstate Insurance Company provided homeowner's coverage to the Morrisons and paid certain claims as a result of losses sustained by the Morrisons. In a consolidated action, Allstate appeals from a separate declaratory judgment in favor of Excess declaring that there was no coverage by Excess for the loss which gives rise to Allstate's subrogation claim, based upon facts decided in Morrison v. BIA, Civil No. A78-295 (D.C.Alaska, June 18, 1982) (Morrison I ).
We affirm in all respects.
I. TERMS OF COVERAGE
Coverage of the YC-122 aircraft was provided by one policy with a hull provision and a liability provision. The terms of the hull provision were considered by the Alaska Supreme Court in Stewart-Smith Hardinger v. Avi-Truck, Inc., 682 P.2d 1108 (Alaska 1984) (Avi-Truck ). The hull policy contained two exclusions (Exclusions c and d) which provide the policy would not apply to any loss while the aircraft is "in flight unless its airworthiness certificate is in full force and effect," and to any flight while the aircraft "is being operated by any ... person in violation of the terms and limitations of the Civil Aeronautics Administration pilot certificate or medical certificate." Avi-Truck, 642 P.2d at 1114, 1117. At the time of the crash, the aircraft did not have an airworthiness certificate and its pilots were flying in violation of their FAA certificates. Presumably, the two exceptions would nullify coverage. The Alaska Supreme Court, however, found the two exceptions did not apply.
In affirming the superior court's decision the supreme court found the binder, which was in effect at the time of the crash, must be interpreted in accordance with the reasonable expectations of the insured. The court found the insured reasonably expected coverage when the plane was flown by its pilots. The court further held "[t]he binder for the YC-122 implied that the plane was insured when it carried freight for hire in the only legal manner it could reasonably have been expected to do so: as a public use aircraft and without an airworthiness certificate." Id. at 1117. The supreme court found that by subsequently issuing a policy denying liability when the aircraft was flown under those circumstances, the nature of the bargain was impermissibly altered. Id. Accordingly, the order of the superior court striking both exclusions was affirmed.
In the underlying action to this appeal, the Morrisons contended the liability of Excess for damages under the liability policy issued to TNA was established by Avi-Truck. Excess filed for summary judgment, claiming there was no coverage as a matter of law due to two exclusions contained in the standard endorsement to the liability policy. The standard endorsement, which was prepared on CAB Form 262, excluded coverage for flights without an airworthiness certificate and for flights by pilots in violation of their FAA certificates. Excess argued that because the YC-122 crashed when it was flown without an airworthiness certificate and by pilots in violation of their FAA certificates, it was excluded from liability for damages under the policy. The district court, however, held that Excess, as a party appellant, is bound by the facts litigated in Avi-Truck. Consequently, the court precluded litigation on the standard endorsement exclusions and found Excess must provide coverage if the plane was flown as a public use aircraft.
On appeal, Excess argues the district court refused to recognize any legal distinction between the exclusions considered in Avi-Truck, and those in the standard endorsement to the liability policy. Unlike the exclusions on the hull coverage, the exclusions in the standard endorsement are governed by federal law. Excess submits there is nothing in the federal regulations to suggest portions of the standard endorsement may be deleted. Moreover, federal regulations require prior Board approval before any non-authorized exclusions may be included in a liability policy. See 14 C.F.R. 298.44 (1988). Excess contends the legal distinctions between the hull exclusion and the liability exclusions are significant. Since the state superior and supreme courts' interpretation of the hull exclusions in Avi-Truck did not consider the effect the standard endorsement would have on the reasonable expectations of the insured, Excess submits the district court erred in precluding Excess from relying on the standard endorsement exclusions.
We find the district court properly precluded Excess from relitigating coverage exclusion matters decided in Avi-Truck. First, it is undisputed that TNA did not enter into separate negotiations for two separate policies. Rather, TNA bargained for the issuance of a single insurance policy covering the YC-122 for both hull and liability risks. It is also significant that the superior court reached its conclusion that the exclusions dealing with the airworthiness certificate and the pilot qualifications did not reflect the nature of the bargain when the court was considering the policy without regard to the separate coverage parts for hull and liability risks. Because the decision was made before the proceeding was bifurcated, it presumptively applies to the entire policy. Excess is bound to provide coverage according to the terms of the bargain.
Paragraph 3 of CAB Form 262 provides that:
The Insurer further agrees that, within the limits of liability for coverages specified in the policy, no term, condition, limitations, stipulation, or other provision contained in the policy or any endorsement attached thereto or any violation thereof by the Named Insured, except the Exclusions contained in this endorsement, shall relieve the Insurer of liability with respect to such bodily injury or property damage.
Thus, Excess is at risk only up to the limits of liability specified in the policy and for coverages specified in the policy. The standard endorsement will not impose liability for coverage not provided by the policy. Here, coverage exists for operations as a public aircraft. Paragraph 7 of the standard endorsement further provides that "[a]ny exclusions ... of this endorsement that have the effect of restricting or nullifying the coverage granted by this policy in the absence of this endorsement shall not apply." The effect of requiring the YC-122 to have had an airworthiness certificate and FAA certified pilots when flown as a public use aircraft would have the effect of restricting or nullifying coverage. Accordingly, these exclusions do not apply. Thus, the district court correctly determined, that "[t]o the extent that the policy does not afford coverage, patently none is constructed by the standard form endorsement." Because the exclusions of the standard endorsement have no effect upon the policy as interpreted by Avi-Truck, the district court did not err by precluding further litigation on the issue of coverage.
II. EFFECT OF AVI-TRUCK ON THE MORRISONS
The Morrisons contend that even assuming the Alaska Supreme Court held that the YC-122 was only insured as a public aircraft, this holding should not have been applied against them because they were not a party or in privy with any party to the state court action.
To determine whether a party is in privy to a party of a prior suit, the courts have applied various guidelines:
Federal courts have deemed several types of relationships "sufficiently close" to justify preclusion. First, a non-party who has succeeded to a party's interest in property is bound by any prior judgments against that party.... Second, a non-party who controlled the original suit will be bound by the resulting judgment.... Third, federal courts will bind a non-party whose interests were represented adequately by a party in the original suit. (Citations omitted)
Hardy v. Johns-Manville Sales Corp., 681 F.2d 334, 339 (5th Cir.1982). We have stated:
Under the doctrine of collateral estoppel, once a court in a prior action has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a different cause of action involving a party to the prior case. (citations omitted) "Party" need not be defined in a rigid manner in this context. (citations omitted). A person technically not a party to the prior action may be bound by the prior decision if his interests are so similar to a party's that that party was his "virtual representative" in the prior action. (citations omitted) A finding of virtual representation may be based on an express or implied legal relationship that makes a party to the prior action accountable to a non-party. (citations omitted).
United States v. Geophysical Corp., 732 F.2d 693, 697 (9th Cir.1984).
The Morrisons submit that they have succeeded to no property interest of Avi-Truck (the plaintiffs in the state court). They claim the interests of Avi-Truck in seeking insurance coverage as owners of the plane are different from theirs since they were seeking compensation for the damage of their home. Furthermore, because they played no role in the state court action, the Morrisons argue they were not in privy with Avi-Truck. In addition, the Morrisons contend that because there is no express or implied legal relationship between them and the parties of the first suit, the doctrine of virtual representation does not apply. Thus, they argue any factual or legal conclusions of the state court action cannot be used against them. As a result, if it is determined that the Alaska Supreme Court held the YC-122 was insured only as a public aircraft, this conclusion cannot be used against them since they did not have their day in court.
Excess refutes this and argues Avi-Truck is applicable to the Morrisons and that any claim for damages under the liability provision must fail if the YC-122 was not operating as a "public use aircraft." In its decision, the Alaska Supreme Court created a new policy based on the binder that "implied" that the plane was insured only when it carried freight for hire as a "public use aircraft." The decision to imply coverage was not accidental, but based on the court's scrutiny and discussion of TNA's expectations. Thus, this portion of the holding cannot be dicta as is contended by the Morrisons, but was necessary to the judgment.
We find the district court did not err in applying the issue of insurance coverage decided by Avi-Truck against the Morrisons. In their motion for summary judgment, the Morrisons contended because they were a judgment creditor of TNA, they were entitled to maintain an action against Excess for the proceeds of TNA's liability insurance coverage, claiming their right to recover by reason of an assignment from TNA, subrogation, and garnishment. The Morrisons' motion, however, was dependent upon the supreme court's decision in Avi-Truck. Since the Morrisons conceded they were suing under the contract between Excess and TNA created by the state courts, the Morrisons must be bound by the terms of that contract. The Morrisons concede they "stand in the shoes" of TNA as far as questions of coverage of the policy are concerned. Thus, the district court properly held that the Morrisons were bound by the facts litigated in Avi-Truck.
Even though the Morrisons were not a party in the state action, the issue being litigated was TNA's insurance policy. Avi-Truck's argued that coverage was provided under the policy. Avi-Truck's interest in finding coverage was as great as the Morrisons--especially since Avi Truck's principals were personally liable on the bank loan on the aircraft. Thus, the Morrisons' interests were adequately represented. The district court did not err in not relitigating the issue of insurance coverage and applying the state decision to the Morrisons' claims.
III. THE DECLARATORY ACTION
The district court elected to exercise jurisdiction over the declaratory action to insure "proper application" of the findings in the federal decision of Morrison I and because questions of federal law were involved in the interpretation and characterization of the insurance policy. On appeal, Allstate argues that its motion to dismiss the declaratory relief action should have been granted.
Allstate contends that it, as well as Excess, was a party litigant in the longstanding consolidated state court litigation. Excess, however, could not remove the consolidated state case to federal court because of the presence of certain parties. At the time of Excess's election to remove the Morrison garnishment action to federal court, the superior court decision was on appeal to the Alaska Supreme Court. Because of the existence of the pending state litigation and the presence of other claims and parties therein, Allstate submits that the decision to exercise jurisdiction over the declaratory action did not promote judicial economy. Allstate further suggests that in a subrogation case, the insurer and the insured are "necessary" parties, but are not "indispensable" parties. Thus, Allstate was not an indispensable party to the Morrison litigation and the decision to exercise jurisdiction could not be based on this premise.
Allstate contends that abstention by the district court should have been exercised because the state court had been extensively involved in litigation involving the identical incident, certain parties could not be joined in the federal litigation, and state substantive law should be used to interpret insurance coverage.
The United States Supreme Court in Colorado River Water Conservation District v. United States, 424 U.S. 800, 818 (1976), discussed four factors the district court should consider when deciding whether to abstain: whether either court has assumed jurisdiction over the property, inconvenience of the federal forum, avoidance of a piecemeal litigation, and the order in which the courts obtained jurisdiction.
Since Excess was subject to a potential claim by Allstate for damages, this complaint for declaratory relief was brought before any such action was filed and received by the court under 28 U.S.C. § 2201. Federal courts have an "unflagging obligation" to exercise the jurisdiction given it. Colorado River, 424 U.S. at 817. Only in exceptional circumstances and with the clearest of justifications would dismissal be warranted. Id. at 818-19.
Given this obligation, the court in Colorado River recognized that the circumstances permitting dismissal of a federal suit due to the existence of a state proceeding for "reasons of wise judicial administration" are considerably more limited than those circumstances which justify abstention. The Court cautioned that the district court's carefully considered judgment should take into account the obligation to exercise jurisdiction and the combination of factors counseling against that exercise. Only the clearest of justifications would warrant dismissal. Id.
Although the district court recognized the substantial amount of time invested by the state court in Avi-Truck, the district court decided to exercise its jurisdiction in the interest of insuring proper application of Morrison I, as well as the interpretation of federal law.
The factors to consider in this case are that the declaratory action was filed first; no claim was pending against Excess by the Morrisons or Allstate in a state proceeding; this was the first case in which the application of the liability provision was considered; Allstate had been merely threatening to bring suit against Excess; by the time Allstate filed its complaint against Excess, substantial progress toward the district court proceeding had been made; the aspects of the state action that were pending involved parties other than Excess, and Excess was exercising its right to choose a federal forum.
The district court's decision to deny Allstate's motion to dismiss is supported by the factors listed above. Accordingly, we find the district court did not err in accepting jurisdiction over the Allstate declaratory judgment, even though the state case was pending in the Alaska Supreme Court.
IV. THE PRECLUSIVE EFFECT OF MORRISON I
The district court concluded that Morrison I held that the YC-122 was not a "public aircraft." In reaching this conclusion, the district court bound the Morrisons to the finding that the YC-122 was not being operated as a public aircraft when it crashed, and precluded them from "relitigating" the issue. The Morrisons contend that the district court misinterpreted Morrison I in that the issue of whether the YC-122 was a public aircraft was not litigated and the district court erroneously applied the doctrine of collateral estoppel to this case. We disagree.
When an issue of fact or law is actually litigated and the determination of that issue is essential to the judgment, the issue may not be relitigated in the same or different claim. American Fabrics, Inc. v. L & L Textiles, 754 F.2d 1524, 1529 (9th Cir.1985); Restatement (Second) Judgments §§ 27, 29 (1982).
In Morrison I, the issue before the court was the liability of the United States for negligence; the court was asked to determine whether the United States or any of its employees were negligent, or whether any negligent acts which were committed by others could be legally imputed to the United States. In their complaint against the Bureau of Indian Affairs (BIA) the Morrisons alleged:
At all relevant times, the Aircraft was operated with the knowledge and consent of the BUREAU OF INDIAN AFFAIRS, and was a "public aircraft" within the meaning of 49 U.S.C.A. § 1301(32) ...
The Morrison I court made the following factual findings. The shipment of government property which was on the YC-122 aircraft was purchased by BIA outside of Alaska and was shipped on a government bill of lading (GBL) prepared in Seattle, Washington. The bill of lading designated Hydro-Train as the carrier to Whittier, Alaska; the Alaska Railroad as the carrier from Whittier to Anchorage; and Wien Airlines as the carrier from Anchorage to the final destination, Stebbins Village, Alaska. At Anchorage, Wien Airlines refused the shipment because it was too large for certain Wien aircraft. The shipment was forwarded to TNA, an air taxi operator on the Department of the Interior, Office of Airline Services' approved list. With BIA approval, TNA inserted its name on the government bill of lading and undertook the shipment. The court held against the Morrisons and found that the "transfer of the GBL did not authorize a charter on behalf of the United States, nor was this GBL an exclusive contract for carriage." The court also found that there was no negligence by the BIA or any other federal employee regarding the loading or operating of the Aircraft.
In Morrison I, the parties actually litigated whether the transfer of federal cargo was a charter or an exclusive contract for carriage. Moreover, the district court's determination on this issue was essential to the judgment in favor of the government. The court held that no federal employees were involved in, or supervised the loading, maintenance, or operation of the aircraft. The court certainly could not have reached this conclusion if it had not first made carefully considered factual determinations concerning the relationship between the BIA and TNA. These factual determinations, including the determination that the transfer of the GBL did not create an exclusive contract for carriage, were therefore essential to the court's disposition of the case.
A public aircraft is defined as "an aircraft used exclusively in the service of any government ..., but not including any government-owned aircraft engaged in carrying persons or property for commercial purpose." 49 U.S.C. § 1301(32); United States v. Aero Spacelines, Inc., 361 F.2d 916, 921-22 (9th Cir.1966). The United States had neither chartered nor procured under the government bill of lading an exclusive contract for carriage. While it is true that the aircraft was being used to convey only government cargo at the time it crashed, such was the carrier's decision, not the result of a charter or an exclusive use contract between the carrier and the government. Absent a charter or an exclusive use contract, the YC-122 was not a public aircraft. See Aero Spacelines, 361 F.2d at 922 (although aircraft was not government owned, contract giving government exclusive use of aircraft brought it within the definition of public aircraft).
Morrison I necessarily decided that the aircraft was not a public aircraft at the time of the crash. Although this finding by the Morrison I court on this issue conflicts with the state court in Avi-Truck, which held that the YC-122 was a public aircraft at the time of the crash, Alaska State Bank v. Avi-Truck, Inc., No. 77-7658 CIV, memorandum decision at 4 (Alaska Super.Ct. Feb. 16, 1982), "[i]f two or more courts render inconsistent judgments on the same claim or issue, a subsequent court is normally bound to follow the most recent determination that satisfies the requirements of res judicata. This is referred to as the 'last in time' rule." Robi v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir.1988) (quoting Americana Fabrics, Inc. v. L & L Textiles, Inc., 754 F.2d 1524, 1526 (9th Cir.1985) (citations omitted). See Americana Fabrics, 754 F.2d at 1529-30. Therefore, becauseMorrison I came after the Alaska trial court's ruling and was thus "last in time," we affirm the district court's decision to give preclusive effect to theMorrison I finding that the aircraft was not a public aircraft at the time of the crash.
V. ALASKA FINANCIAL RESPONSIBILITY LAW
Although it was subsequently repealed, appellants argue that the Alaska Financial Responsibility Act (AS 02.05.130) that was in force at the time of the crash should have been given effect. AS 02.05.130(a) provides:
No certificate may be issued to a person to operate as an air carrier within the state and no certificated carrier may operate within the state unless the person or carrier has produced and kept in force a reasonable security required by the Commission for the protection of the public against damage and injury for which the carrier may be liable by reason of its operation as a carrier.
For the purposes of this statute, an air carrier is defined as "a person undertaking to engage in air commerce whether directly or indirectly, or by lease, contract, or any other arrangement, and whether over regular or irregular routes." AS 02.05.250.
Allstate cites a provision of the policy at issue which provides:
3. FINANCIAL RESPONSIBILITY LAWS: When this Certificate is certified as proof of financial responsibility for the future under the provisions of any aircraft financial responsibility law, such insurance as is afforded by this Certificate for bodily injury liability or for property damage liability shall comply with the provisions of such law to the extent of the coverage and limits of liability required by such law. The insured agrees to reimburse the Underwriters for any payment made by the Underwriters which it would not have been obligated to make under the terms of the Certificate except for the agreement contained in this paragraph.
(CR-43, exhibit A).
Based on this inclusion and the financial responsibility statutes, Allstate argues that the condition subsequent created by the court is rendered unenforceable. Allstate's contention is without merit.
The provision in the policy expressly contracted the insurers to comply the insurance certificates to any financial responsibility laws. Neither Allstate nor the Morrisons argued below that Excess's policy coverage was less than that certified to the State Commission. Moreover, Excess contracted to insure the aircraft when it was operating as a public aircraft and was not raising a "technical defense" to avoid the financial responsibility laws. Royal Indemnity Co. v. Olmstead, 193 F.2d 451, 453 (9th Cir.1951); see Traill v. Felder, 330 F.Supp. 560, 564-65 (D.Alaska, 1971). As recognized by the district court, the financial responsibility law places an obligation upon air carriers to acquire insurance; it does not require an insurer to issue an all-risk policy every time the insurer writes insurance coverage for an air carrier. Accordingly, we hold that the financial responsibility law does not nullify the limited nature of the coverage provided by the Excess policy.
AFFIRMED.
FLETCHER, Circuit Judge, dissenting:
This case is unusual in that two earlier decisions, one by a State of Alaska court, one by a federal district court (in an earlier case, Morrison I, not on appeal here) reached opposite determinations on the controlling issue in this case: whether the aircraft was a "public aircraft." The issue was absolutely essential to the Alaska state court's decision, and that court, whether right or wrong on the substance, had to find that the aircraft was a public aircraft in order to hold that there was insurance coverage for the hull. The issue was irrelevant to the federal district court's decision in Morrison I, and yet the district court in the case now on appeal found itself unfettered by the state court's essential ruling and nonetheless bound by the irrelevant ruling in Morrison I. Now the majority compounds the error by failing to correct the district court's misapplication of res judicata in the decision appealed to us. I therefore dissent from Part IV of the majority disposition.
The issue in Morrison I was whether the crash of the Chase aircraft was caused by the negligence of the federal government or its employees. The court inMorrison I found, "No federal employees were involved with, participated in, or supervised the loading, maintenance or operation of the Chase aircraft." That would seem to absolve the federal government not only of negligence but of responsibility for the crash under any theory of liability. But the majority holds that to find negligence the Morrison I court had to do more than find no causation, it had to decide the irrelevant question of whether the carrier had an "exclusive contract" with the government as well. With this conclusion, I cannot agree.
In Robi v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir.1988), we held that "[i]f two or more courts render inconsistent judgments on the same claim or issue, a subsequent court is normally bound to follow the most recent decision that satisfies the requirements of res judicata." The Morrisons contend that Morrison I does not satisfy the requirements of res judicata. They contend that in Morrison I, the issue whether the YC-122 was a public aircraft was not litigated, that if it was litigated the court did not definitively decide the issue, and that even if the court did definitively decide the issue, its decision on the issue was not essential to its judgment.
The requirements of issue preclusion are met only when an issue is actually litigated and the determination of that issue is essential to the judgment. American Fabrics, Inc. v. L & L Textiles, 754 F.2d 1524, 1529 (9th Cir.1985); Restatement (Second) Judgments §§ 27, 29 (1982).
In Morrison I, it is clear that the parties actually litigated whether the transfer of federal cargo was a charter or exclusive contract for carriage. It is also apparent that the Morrison I court decided that the YC-122 was not a public aircraft when it found, "The transfer of the GBL did not authorize a charter on behalf of the United States nor was this GBL an exclusive contract for carriage." But the finding that the plane was not a public aircraft wasnot essential to the court's holding that the BIA was not negligent.
In Hobbs v. Mobil Oil Corp., 445 P.2d 933, 934 (Alaska 1968), the Alaska Supreme Court adopted the Restatement (Second) of Torts § 414 (1965), which sets forth the rule for retained control, or direct, liability. That rule provides that when an employer hires an independent contractor to perform certain work, the employer is liable for harm caused by the contractor's negligence if the employer retains control of any part of the work and fails to exercise that control with reasonable care. Thus the question of the BIA's negligence in Morrison I turned on whether it had the right to control the operation of the aircraft. The question of the government's right to control the aircraft is not the same as the question whether the aircraft was a "public aircraft."
A "public aircraft" is defined as "an aircraft used exclusively in the service of any government...." 49 U.S.C. § 1301(32). The majority holds that even though the aircraft was carrying only government cargo when it crashed, that did not necessarily mean there was a contract for exclusive use. The same line of reasoning would dictate that even if the government retained control over the aircraft, that would not necessarily make the contract one for exclusive use. The question of exclusive contract to ship only a particular person's goods turns on what the two parties to the contract intend about other parties' rights to do business with the carrier; it turns not at all on how the shipper and carrier actually divide responsibility among themselves for the operation of the aircraft at issue. Yet negligence has only to do with the parties' duties and responsibilities regarding the operation of the aircraft. An aircraft could be chartered for the exclusive use of a person who wishes to transport goods on it and yet the person might have no right to exercise control over the operation of the aircraft for the purposes of rendering him liable under a "retained control" theory of negligence. Or conversely, a person who is not the exclusive user of a particular aircraft could exercise substantial control over the operation of the aircraft on which his goods are being shipped and nonetheless still be liable for the aircraft's negligent operation.
In Hobbs, 445 P.2d at 936, the court held that the question whether the employer of an independent contractor is responsible for the negligence of the contractor depends upon the extent to which the employer has the right to control the contractor and the extent to which the employer has in practice exercised control. The opinion did not suggest that the status of the contract between employer and contractor as exclusive or nonexclusive governed or even that it was necessarily relevant. Instead the court focused on the nitty gritty details of the relationship between the parties both as spelled out in their agreement and in actual practice. It follows from Hobbs that determining whether an aircraft is a public aircraft because it is "used exclusively in the service" of a government does not require an analysis of the same factors that must be analyzed to determine physical and operational "control." In short, a decision on "exclusive use" is not essential to a decision on negligence.
After finding that the government bill of lading was not an exclusive contract, the Morrison I court found that "[n]o federal employees were involved with, participated in, or supervised, the loading, maintenance, or operation of the Chase aircraft." The latter finding was tantamount to a finding that the federal government retained no control over the operation of the aircraft, and it was thus dispositive of the negligence claim. In contrast, the "exclusive contract" finding was unnecessary surplusage.
To the extent that the Morrisons in Morrison I were asserting a theory of vicarious liability in addition to a direct or retained control theory, this finding of no federal employee participation in or supervision of the operation of the aircraft is also dispositive. The question of whether there was a contract with the BIA for "exclusive service" is as irrelevant to a theory of vicarious liability as it is to a theory of direct liability. To establish the BIA's vicarious liability, the Morrisons would have had to show that a BIA employee was negligent. The nature of the contract for transport as exclusive or nonexclusive does not bear on the question whether a BIA employee was negligent. Nor does the nature of a contract between a shipper and a carrier as exclusive or nonexclusive bear on the question whether the shipper is liable for negligence in hiring the carrier.
Since the public aircraft determination was unnecessary to the holding inMorrison I, that determination does not satisfy an important prerequisite to the invocation of issue preclusion. The requirement that a finding be necessary to the judgment is important, because parties have little or no incentive to appeal an issue that is not dispositive. Given the Morrison I court's sweeping absolution of the government from any responsibility for the plane crash, there was no reason for the Morrisons to take an appeal on the peripheral "public aircraft" issue. Yet now their failure to engage in futile litigation costs them dearly.
The district court erred in giving Morrison I's prior unnecessary ruling preclusive effect. The court should instead have given preclusive effect to the Alaska superior court's determination in Avi-Truck. I would reverse the district court's grant of summary judgment against the Morrisons. That would make it unnecessary for me to reach part V of the disposition.