Wednesday, June 17, 2015

The Preclusion Doctrine


Hon. John J. DiMotto

     The Preclusion Doctrine is a legal principle that precludes or estops a party from pursuing a lawsuit against another party based on a prior lawsuit.  The Preclusion Doctrine exists in two fields: 
Claim Preclusion and Issue Preclusion.


     Under claim preclusion, also referred to as res judicata, a final judgment is conclusive in all subsequent actions between the same parties or their privies as to all matters which were litigated or which might have been litigated in the former proceedings.  To apply, this Doctrine requires: 

1)  An identity of parties or their privies;
2)  An identity of causes of action in the two cases; and
3)  A final judgment on the merits in a court of competent jurisdiction in the first action.

Town of Delafield v. Winkelman, 269 Wis.2d 109 (2004).


     Issue preclusion, also referred to as collateral estoppel, is designed to limit the relitigation of issues that have been actually litigated in a previous action.

     Issue preclusion is much narrower than claim preclusion: 

1)  Identity of parties is not required;
2)  It can be used offensively -- to bring a suit or defensively -- to stop a suit.
3)  The threshold prerequisite in order to be precluded from relitigating an issue is that a party must have "actually litigated" it previously.
4)  It must comport with principles of fundamental fairness.

Paige K.B. v. Steven G.B., 226 Wis.2d 210 (1999).

     In undertaking its "fundamental fairness" analysis, there are five factors that the court can consider:

1)  Could the party against whom preclusion is sought have obtained review of the judgment?
2)  Is the question one of law that involves two distinct claims?
3)  Do significant differences in the quality or extensiveness of proceedings between the two courts warrant relitigation of the issue?
4)  Have the burdens of persuasion shifted such that the party seeking preclusion had a lower burden of persuasion in the first trial than in the second? or
5)  Are matters of public policy and individual circumstances involved that would render application of issue preclusion fundamentally unfair?

Factors 1, 2 and 4 present questions of law for the Court.
Factors 3 and 5 fall within the trial courts discretion.

Estate of Rille v. Physicians Ins. Co., 300 Wis.2d 1 (2007)


     Let's look at how courts have construed the application of the Preclusion Doctrine in a few real life scenarios.

     In Masko v. City of Madison, 265 Wis.2d 442 (Ct. App. 2003), the plaintiff tried a traffic matter in municipal court and lost.  Plaintiff then brought a civil action for damages in circuit court.  The trial court dismissed the case based on issue preclusion.  The Court of Appeals affirmed the trial court holding that the issue of liability was fully litigated in the municipal court traffic ticket case and therefore it could not be relitigated in a civil tort action for damages.  The Court indicated that preclusion derives from the assumption that, in fairness to the defendant, there is a point at which litigation involving the particular controversy must end.  The doctrine may apply even if the cause of action in the second suit is different than the first suit.  However, the issue must actually have been litigated and the party seeking preclusion bears the burden of proof in that regard.  Here, there was sufficient identity of interest and preclusion comports with fundamental fairness.

     In Randall v. Felt, 256 Wis.2d 563 (Ct. App. 2002), the plaintiff, filed an inventory in the Estate of Felt, but did not include two accounts that plaintiff contended were joint accounts with right of survivorship.  These accounts were set up while the decedent was under a guardianship.  The defendant objected.  The probate court conducted a hearing but took no testimony and ruled that the guardianship precluded any argument about the competency of a ward to give joint tenancy in property. The issue in the case was whether the issue regarding the accounts had actually been litigated in the guardianship proceeding.  Here, the Court of Appeals stated that the threshold prerequisite in order to be precluded from relitigating an issue is that a party must have "actually litigated" it previously.  The court further stated that an issue is "actually litigated" when it is properly raised by pleadings or otherwise and is submitted for determination and is determined.  In this case, the Court of Appeals held that there never was actual litigation of the account issue in the guardianship case and thus issue preclusion dictates were not met and did not apply to bar litigation over the accounts.

     In Paige K.B., supra, the plaintiff sued her father for battery and intentional infliction of emotional distress for sexually assaulting plaintiff.  Plaintiff sued her paternal grandparents for negligence in failing to properly supervise their son and alleging that they negligently inflicted emotional distress upon plaintiff.  The father was convicted of sexual assault in his criminal case.  The trial court precluded the grandparents from litigating the sexual assault issue.  Here, the Supreme Court reversed the trial court's decision.  The Court determined that the grandparents were not so closely aligned with their son that they represent the same legal interest and that there was not sufficient identity of interest to comport with due process citing to Restatement (Second) Judgments sec 85.

     In Mrozek v. Intra Financial Corp., 281 Wis.2d 448 (2005), in determining whether an issue was "actually litigated", the Court held that a guilty plea does not constitute issue preclusion.  A guilty plea is not the same as a fully litigated trial between adversarial parties resulting in the fact finder determining that the facts prove the defendant committed the crime.

     In City of Sheboygan v. Nytsch, 296 Wis.2d 73 (Ct. App. 2006), the Court of Appeals  held that the City was not precluded from litigating a probable cause to arrest issue finding that the proceedings at a Department of Transportation Administrative Hearing on the suspension of the defendant's license did not constitute actual litigation.  In a footnote, the Court cites to Restatement (Second), Judgments sec 27 that holds that an issue is not actually litigated if it is the subject of a stipulation.

     In Wisconsin Public Service Corp. v. Arby Construction, 342 Wis.2d 544 (2012),  the Court set forth that claim preclusion exists to prevent endless litigation and that under claim preclusion a final judgment is conclusive in all subsequent actions between the same parties as to all matters which were or might have been litigated in the former proceeding.  Further, that in the claim preclusion scenario, the court looks beyond form of the pleading to the substance of the pleading.  The Court also indicated that claim preclusion is a rule of public policy and of private benefit to individual litigants and that the protection from the annoyance of repeated litigation which the individual sector is afforded is an incident of the first principle that the best interest of society demands that litigation be concluded.

     In Kruckenberg v. Harvey, 279 Wis.2d 520 (2005), the Court set forth that Wisconsin uses a "transactional approach" to determine if there is identity of causes of action in the two suits.  The Court further stated that under claim preclusion, a valid final judgment extinguishes all rights to remedies against a defendant with respect to all or any part of the transaction or series of connected transactions out of which the action arose.  The Court also proferred that although fairness is an element in the Doctrine of Issue Preclusion, the Court has not adopted fairness as a factor in the Doctrine of Claim Preclusion.  However, the concept of fairness does underlie both.

     In Northern States Power Co. v. Bugher, 189 Wis.2d 541 (1995), the Court set forth that claim preclusion is designated to draw the line between meritorious claims and vexatious, repetitious and needless claims.


     The Preclusion Doctrine stands for the proposition that once litigation is commenced that all causes of action that relate to the transaction should be pursued so that at the end of the case all issues are resolved and finality achieved.  One might say:  "Do It Once:  Do It Right."