Opinion
No. WD 63792
June 28, 2005
Appeal from the Circuit Court of Lafayette County, The Honorable Dennis A. Rolf, Judge.
Before Holliger, P.J., Breckenridge and Ellis, JJ.
Terri Jo Hemme and Terry Hemme appeal the trial court's grant of summary judgment in favor of Sam Bharti, Kusum Bharti, Bharti Midway Properties, Inc. (referred to collectively as "the Bharti Defendants"), and R.J. Reynolds Tobacco Company on the Hemmes' claims arising out of an automobile accident. On appeal, the Hemmes assert that the trial court erred, in two respects, in granting summary judgment in favor of the Bharti Defendants and R.J. Reynolds and in dismissing their claims. First, they claim that the trial court erred in granting summary judgment because Rule 55.32(a), the compulsory counterclaim rule, does not bar them from asserting their claims against the Bharti Defendants and R.J. Reynolds, their co-defendants in a prior suit. Second, they contend that the doctrine of res judicata does not bar their claims. Because this court finds that Rule 55.32(a) bars the Hemmes' claims because they were compulsory counterclaims in the prior suit, the judgment of the trial court is affirmed.
Factual and Procedural Background
On February 6, 1998, while Ms. Hemme was pulling out of the Bharti Liquor Store parking lot in Lexington, her vehicle collided with another vehicle, which was being driven by Deborah Harrison. As a result of the collision, both Ms. Hemme and Ms. Harrison sustained injuries. Ms. Harrison filed suit against Ms. Hemme and Sam Bharti, owner of the Bharti Liquor Store. Ms. Harrison alleged that Ms. Hemme negligently operated her vehicle and that Sam Bharti negligently placed signs on his property that blocked the vision of traffic entering or exiting his parking lot. Ms. Harrison subsequently filed an amended petition adding Kusum Bharti and Bharti Midway Properties, Inc., as additional defendants.
Thereafter, the Bharti Defendants filed a third-party petition against R.J. Reynolds. The Bharti Defendants alleged that R.J. Reynolds was responsible for placement of the sign that allegedly impaired the view of both Ms. Hemme and Ms. Harrison. The Bharti Defendants sought contribution or partial indemnity from R.J. Reynolds, in the event the Bharti Defendants were held liable to Ms. Harrison for her injuries. Ms. Harrison eventually filed a third amended petition, which added R.J. Reynolds as a defendant.
In response, the Bharti Defendants filed an amended answer to Ms. Harrison's third amended petition and cross-claims against Ms. Hemme and R.J. Reynolds. The cross-claims sought contribution and apportionment of fault should the Bharti Defendants be found liable for Ms. Harrison's injuries. R.J. Reynolds followed suit by filing an amended answer to Ms. Harrison's third amended petition and cross-claims against Ms. Hemme and the Bharti Defendants for contribution and apportionment of fault should R.J. Reynolds be found liable for Ms. Harrison's injuries.
On May 22, 2002, Ms. Hemme filed an answer to the Bharti Defendants' cross-claim. Ms. Hemme also asserted a cross-claim against the Bharti Defendants and R.J. Reynolds for contribution by way of apportionment of fault should she be found liable for Ms. Harrison's injuries. Ms. Hemme's cross-claim did not seek damages for the personal injuries she sustained in the accident. Ultimately, by the end of 2002, Ms. Harrison's lawsuit was settled and the parties dismissed all of their claims with prejudice.
On February 3, 2003, the Hemmes filed the instant lawsuit stating claims arising out of the same accident. In Count I of their petition, the Hemmes alleged that the Bharti Defendants maintained a dangerous condition on their property, that being a cigarette sign, which obscured the vision of business invitees entering and exiting the Bharti Liquor Store. They further alleged that as a direct and proximate cause of the Bharti Defendants' negligence in maintenance of the sign, Ms. Hemme collided with Ms. Harrison while exiting the Bharti Defendants' property and suffered severe and permanent injuries. In Count II, the Hemmes alleged that R.J. Reynolds was negligent in placing a cigarette sign on the Bharti Defendants' property in a location that blocked the vision of drivers entering and exiting the Bharti Liquor Store. In both Counts I and II, Ms. Hemme sought damages for her personal injuries. In Count III, Mr. Hemme sought damages against the Bharti Defendants and R.J. Reynolds for loss of consortium, services, and medical expenses.
In response, both R.J. Reynolds and the Bharti Defendants filed motions for summary judgment, asserting that Rule 55.32(a), the compulsory counterclaim rule, and the doctrine of res judicata barred the Hemmes' claims. Following a hearing, the trial court granted summary judgment in favor of the Bharti Defendants and R.J. Reynolds and dismissed the Hemmes' claims with prejudice. The Hemmes filed this appeal.
Standard of Review
Appellate review of a summary judgment is de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp. , 854 S.W.2d 371, 376 (Mo. banc 1993). This court's criteria for ascertaining the propriety of summary judgment are the same as those that a trial court uses initially. Id. This court does not defer to the trial court's order granting summary judgment because the trial court's initial judgment is based on the record submitted and amounts to a decision on a question of law. Id. Summary judgment is appropriate where the moving party establishes that no genuine issue of material fact exists and a right to judgment as a matter of law. Id. at 378.
For movants who are the defending parties in a lawsuit, the prima facie showing required by Rule 74.04 is "necessarily different." Id. at 381. A defending party may establish a right to judgment, as a matter of law, by showing:
(1) facts that negate any one of the claimant's elements facts, (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements, or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support the movant's properly-pleaded affirmative defense.
Id.
Claims Barred by Compulsory Counterclaim Rule
In their first point on appeal, the Hemmes assert that the trial court erred in granting summary judgment in favor of the Bharti Defendants and R.J. Reynolds because their claims are not barred by Rule 55.32(a), which makes compulsory the filing of counterclaims against opposing parties. Specifically, they assert that the cross-claims for contribution and indemnification brought by Ms. Hemme, R.J. Reynolds, and the Bharti Defendants in the prior case were permissive cross-claims and did not cause the co-defendants to become opposing parties. Thus, the Hemmes conclude, because Ms. Hemme, R.J. Reynolds, and the Bharti Defendants were not opposing parties, Rule 55.32(a) was not applicable. Therefore, they argue that they were not required to assert all claims arising out of the automobile accident against R.J. Reynolds and the Bharti Defendants in the prior action, and the trial court erred in granting summary judgment on the basis that Rule 55.32(a) barred their claims.
The relevant portion of Rule 55.32(a), the compulsory counterclaim rule, provides:
A pleading shall state as a counterclaim any claim that at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.
The purpose of Rule 55.32 is "`to serve as "a means of bringing all logically related claims into a single litigation, through the penalty of precluding the later assertion of omitted claims."'" Joel Bianco Kawasaki Plus v. Meramec Valley Bank , 81 S.W.3d 528, 532 (Mo. banc 2002) (citations omitted). By its terms, Rule 55.32(a) applies to pleadings between "opposing parties." The Hemmes argue that they were not required to bring their personal injury claims in the prior lawsuit brought by Ms. Harrison because Ms. Hemme, the Bharti Defendants, and R.J. Reynolds were co-parties, not "opposing parties" despite the filing of cross-claims, since cross-claims are permissive claims under Rule 55.32(f).
Rule 55.32(f) states, in pertinent part:
A pleading may state as a cross-claim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action.
The Hemmes are correct that the permissive language used in subsection (f) makes cross-claims between co-parties permissive. Brown v. Harrison , 637 S.W.2d 145, 148 (Mo.App. 1982) ("cross-claims are permissive under Rule 55.32(f)"). In Jones v. Corcoran , 625 S.W.2d 173, 175 (Mo.App. 1981), however, the Eastern District held that, once a cross-claim has been filed between co-parties, co-parties become "opposing parties," thereby triggering the compulsory counterclaim rule, regardless of the fact that an initial cross-claim is permissive.
The circumstances in Jones were that an underlying lawsuit for wrongful death and personal injury resulting from a three-vehicle collision had been filed by the plaintiffs against four defendants, including Mr. Jones. 625 S.W.2d at 174. The co-defendants in that suit filed cross-claims against one another for indemnity or apportionment. Id. Mr. Jones also filed a separate cross-claim against a co-defendant for the personal injuries he sustained in the accident. Id. In ruling on a writ of prohibition filed by Mr. Jones challenging the granting of the plaintiffs' motion for severance of Mr. Jones' cross-claims for personal injuries, the court found that "[i]n the absence of the indemnity and apportionment claims it would [have] be[en] unnecessary for [Jones] to file his personal injury action in this case[.]" Id. at 175. In particular, the court found that once cross-claims seeking apportionment were filed, the co-defendants became "`opposing parties,'" thereby "triggering the provisions of Rule 55.32(a)." Id. Consequently, the court found that Mr. Jones' personal injury claim was a compulsory counterclaim. Id.
The Hemmes, however, cite a subsequent Eastern District case, Jacobs v. Corley , 732 S.W.2d 910, 914 (Mo.App. 1987), which, contrary to Jones , holds that the filing of permissive cross-claims does not make co-parties "opposing parties." In Jacobs , Dean Witter Reynolds, Inc., filed an interpleader action to determine who was entitled to the cash portion of a settlement: R. Jacobs, an attorney, or Marilyn Corley, Mr. Jacobs' client. Id. at 911. In the interpleader action, both Mr. Jacobs and Ms. Corley filed numerous cross-claims against each other. Id. After an unfavorable judgment in the interpleader action, Mr. Jacobs filed a subsequent suit against Ms. Corley for breach of the parties' contingent attorney fee contract and fraud. Id. In response, Ms. Corely filed a motion to dismiss claiming that Mr. Jacobs was precluded under Rule 55.32 from litigating the issues in a separate action because he failed to raise them in the previous interpleader action. Id. at 911-12. The trial court granted the motion to dismiss. Id. at 912. On appeal, the court reversed, finding that while "co-defendants' interests may well be adverse, as in the case of joint-tortfeasors, . . . that does not serve to transform them from co-parties into opposing parties under Rule 55.32(a) governing counterclaims." Id. at 914. The court found that because the claims filed by the co-defendants in the prior interpleader action were permissive cross-claims, Mr. Jacobs' failure to raise them in the prior action did not bar him from raising them in a subsequent suit. Id.
The authority cited in Jacobs does not support its conclusions. Jacobs relied on Brown , 637 S.W.2d at 147-48, for the concept that co-defendants that have adversary interests, such as joint-tortfeasors, are not necessarily transformed into opposing parties by Rule 55.32(a), which governs counterclaims. Jacobs , 732 S.W.2d at 914. Jacobs also relies on Brown for the principle that cross-claims are "merely permissive rather than compulsory." Id. While Jacobs correctly cites Brown , these principles do not support Jacobs ' conclusion that once a permissive cross-claim is filed, the co-parties do not become opposing parties and the compulsory counterclaim rule is not triggered.
In fact, the court in Brown did not consider that issue. In Brown , the plaintiff, Larry Brown, brought claims for damages arising out of an automobile accident against Billy Thomas Harrison and Joyce Lee Oliver. 637 S.W.2d at 146. Mr. Harrison filed a request for apportionment of damages. Ms. Oliver then filed a cross-claim and petition for damages against Mr. Harrison. Id. Before trial commenced on Mr. Brown's claims, Ms. Oliver requested that her cross-claim for damages be severed. Id. Mr. Harrison objected to the severance. Id. The trial court overruled Mr. Harrison's objection, granted the severance, and proceeded with the trial on Mr. Brown's claims. Id. A jury found for Mr. Brown and found that Mr. Harrison was seventy-five percent negligent and Ms. Oliver was twenty-five percent negligent. Id. Mr. Harrison then filed a motion for summary judgment on Ms. Oliver's cross-claim, asserting that it was barred as a matter of law because the judgment in the first trial was res judicata. Id. Alternatively, applying the principle of contributory negligence, he asserted that Ms. Oliver should be collaterally estopped from proceeding based on the jury's verdict finding that there was an apportionment of fault between them. Id. In rejecting Mr. Harrison's argument, the court recognized that Mr. Harrison and Ms. Oliver were in adversary positions as to Ms. Oliver's cross-claim " before it was severed for separate trial." Id. at 147 (emphasis added). Since Ms. Oliver's cross-claim was severed, however, the issues between Mr. Harrison and Ms. Oliver were never litigated in the first trial. Id. As a result, Mr. Harrison and Ms. Oliver were not "opposing parties" in the prior proceeding. Id.
In Joel Bianco Kawasaki , the Supreme Court explained that "`[t]he compulsory counterclaim rule is simply the codification of the principles of res judicata and collateral estoppel.'" 81 S.W.3d at 532 (citation omitted).
The holding of Brown is that severing a cross-claim of a co-defendant leaves the co-defendants in the trial of the plaintiff's claims as though the cross-claim was never brought. And, because the issues raised in the cross-claim were never adjudicated, the verdict of the trial of the plaintiff's claims is not binding on the co-defendants in the subsequent trial of the severed cross-claim. The procedural posture of the parties in Brown is not the same as the parties in Jacobs. In Jacobs , the cross-claims filed in the initial proceeding were actually litigated, thereby making Mr. Jacobs and Ms. Corely opposing parties in the initial interpleader action.
While Brown does state that "cross-claims are permissive under Rule 55.32(f)," the authority upon which it relies makes clear that it is not holding that the filing of cross-claims does not make co-parties opposing parties for purposes of the compulsory counterclaim rule. Moreover, the authorities Brown cites are more consistent with the holding of Jones , not Jacobs. For example, Brown relies on Cook v. Kendrick , 167 N.W.2d 483 (Mich.Ct.App. 1969). In Cook , the court found that "[t]he fact that a co-defendant could have filed a cross-cross does not bar by res judicata a later action against a co-defendant on a cross-claim action not filed." 167 N.W.2d at 485 (emphasis added). In addition, Cook stated that "`adverse parties as to whom judgment is [r]es judicata are opposite parties to issue raised by appropriate cross pleadings between themselves[.]'" Id. at 486 (citation omitted). Similarly, Brown relied on McKinney v. Townsend , 330 N.E.2d 20, 21 (Ohio C.P. 1975), which found that co-defendants were not adversary parties in a prior action because no claims were asserted between them in the prior case. See also V. Woerner, Annotation, Judgment in Action Against Codefendants for Injury or Death of Person, or for Damage to Property, as Res Judicata in Subsequent Action Between Codefendants as to their Liability Inter Se, 24 A.L.R.3d 318, section 10 (1969) (discussing cases where it has been held that judgment against all co-defendants was not res judicata in subsequent action between co-defendants where co-defendants did not file cross-claim against each other in prior action).
Additionally, Jacobs cites Augustin v. Mughal , 521 F.2d 1215, 1216 (8th Cir. 1975), and Peterson v. Watt , 666 F.2d 361, 363 (9th Cir. 1982). Jacobs , 732 S.W.2d at 914. Neither Augustin nor Peterson support Jacobs ' holding, however, because in neither case was a cross-claim filed against co-parties in the initial proceeding. Thus, the authority cited by Jacobs does not support its conclusion. Accordingly, this court finds the rationale of Jacobs unpersuasive, and finds that the holding of Jones is a correct application of the law relevant to the issues raised in that case.
Jacobs is cited by State ex rel. Scott v. State Farm Fire Casualty Co. , 947 S.W.2d 530 (Mo.App. 1997), for the principle that co-defendants were not opposing parties in a prior interpleader action and, therefore, not required to raise compulsory counterclaims. Nevertheless, the record does not indicate that the co-defendants in Scott filed cross-claims against each other in the prior action. Therefore, this court agrees with the finding in Scott that the co-defendants were not opposing parties in the prior action and, thus, Rule 55.32(a) was not triggered, although as noted, supra, this court disagrees with the rationale.
Jones holds that the filing of cross-claims for indemnity makes co-defendants "opposing parties" for purposes of Rule 55.32(a). The holding of Jones does not distinguish between the nature of the cross-claim filed. There are cases in other jurisdictions that also do not distinguish between the nature of the cross-claim filed. For example, the court in Kane v. Magna Mixer Co. , 71 F.3d 555, 562 (6th Cir. 1995), found that a claim for indemnity triggers the compulsory counterclaim rule and makes no requirement concerning the nature of the cross-claim filed. Similarly, the court in Ecker v. Clark , 428 S.W.2d 620, 621 (Ky.Ct.App. 1968), found that co-defendants in a lawsuit involving injuries sustained in an automobile accident became opposing parties and subject to compulsory counterclaim rule when one co-defendant asserted a claim for contribution against the other co-defendant. Ecker also made no requirement concerning the nature of the cross-claim filed. Finally, the court in Miller v. LHKM , 751 P.2d 1356, 1359 (Alaska 1988), found that parties become opposing parties under the compulsory counterclaim rule once a co-party asserts a cross-claim against another co-party, again making no requirement concerning the nature of the cross-claim.
The Hemmes, nevertheless, contend that, if the filing of cross-claims is held to make co-defendants "opposing parties" for purposes of the compulsory counterclaim rule, that rule should only apply when the cross-claim asserted is a substantive claim. The Hemmes further argue that a cross-claim for contribution is not a substantive claim and, therefore, does not trigger the compulsory counterclaim rule. There are a number of cases that hold that a cross-claim must be substantive to trigger the compulsory counterclaim rule and that a cross-claim for contribution or indemnity is not a substantive claim. For example, in Paramount Aviation Corp. v. Agusta , 178 F.3d 132, 146 n. 11 (3rd Cir. 1999), the court found that while "the filing of a cross-claim makes parties `opposing parties' within the meaning of Federal Rule of Civil Procedure 13," a claim for contribution and indemnification is not a substantive claim and, therefore, the compulsory counterclaim rule is not triggered. See also Kirkcaldy v. Richmond County Bd. of Educ. , 212 F.R.D. 289, 297 (M.D.N.C. 2002) ("`opposing party' includes co-defendants once a substantive cross-claim is filed by one co-defendant against the other" and claim for contribution and indemnification is not substantive claim); Rainbow Mgmt. Group, Ltd. v. Atlantis Submarines Hawaii, L.P. , 158 F.R.D. 656, 660 (D. Haw. 1994) (same).
It is not necessary, however, to determine whether the filing of a cross-claim that is not substantive would make co-defendants opposing parties because that is not the issue raised by this case. The cross-claims filed by the Bharti Defendants, R.J. Reynolds, and the Hemmes were substantive claims. In Missouri, "[t]he right to partial indemnity or contribution is substantive in nature[.]" Safeway Stores, Inc. v. City of Raytown , 633 S.W.2d 727, 728 n. 1 (Mo. banc 1982) (citing Roth v. Roth , 571 S.W.2d 659 (Mo.App. 1978)) (emphasis added). In particular, in ruling whether the rule of Missouri Pacific Railroad Co. v. Whitehead Kales Co. , 566 S.W.2d 466 (Mo. banc 1978), concerning contribution was retroactive, the Missouri Supreme Court held that the rule was retroactive because a cross-claim for contribution is substantive in nature. Safeway Stores , 633 S.W.2d at 728 n. 1. Thus, even if a cross-claim for contribution and indemnification filed against a co-party must be substantive before co-parties become "opposing parties" for purposes of Rule 55.32(a), that requirement was met in this case.
In this case, the Hemmes' personal injury claims arose out of the same automobile accident that was the subject matter of Ms. Harrison's prior lawsuit. In addition, because Ms. Hemme, R.J. Reynolds, and the Bharti Defendants all asserted cross-claims for contribution and indemnification against one another in Ms. Harrison's lawsuit, Ms. Hemme, R.J. Reynolds, and the Bharti Defendants were "opposing parties." Consequently, under Rule 55.32(a), Ms. Hemme was required to assert all claims arising out of the automobile accident with Ms. Harrison as compulsory counterclaims in the prior case. Because Ms. Hemme failed to raise her personal injury claims in the prior lawsuit, the Hemmes are now barred from bringing such claims in this case. Joel Bianco Kawasaki , 81 S.W.3d at 532.
In their second point on appeal, the Hemmes contend that their claims are not barred under the doctrine of res judicata. Because this court's finding that the Hemmes' claims are barred by the failure to assert them as compulsory counterclaims in the prior lawsuit brought by Ms. Harrison is fully dispositive of this appeal, the Hemmes' second point need not be considered. Accordingly, the trial court's judgment is affirmed. By order of the majority of the participating judges, on their own motion, pursuant to Rule 83.02, this court transfers this case to the Missouri Supreme Court because of the general interest and importance of the question involved with the case and for the purpose of reexamining existing law.
All concur.