-
USCA1 Opinion
United States Court of Appeals United States Court of Appeals
For the First Circuit For the First Circuit
____________________
No. 95-2197
DARYL E. PORN,
Plaintiff, Appellant,
v.
NATIONAL GRANGE MUTUAL INSURANCE COMPANY,
Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge] ___________________
____________________
Before
Selya, Stahl, and Lynch,
Circuit Judges. ______________
____________________
Catherine R. Connors, with whom Scott T. Maker and Pierce, ______________________ ________________ _______
Atwood, Scribner, Allen, Smith & Lancaster, were on brief for _______________________________________________
appellant.
Constance L. Epstein, with whom John R. FitzGerald, Matthew D. ____________________ ___________________ ___________
Gilmond, Howard, Kohn, Sprague & Fitzgerald, Harold J. Friedman, _______ _____________________________________ ___________________
Elizabeth A. Germani, Jonathan M. Dunitz, and Friedman & Babcock, were ____________________ __________________ __________________
on brief for appellee.
_____________________
August 23, 1996
_____________________
STAHL, Circuit Judge. Having successfully sued his STAHL, Circuit Judge. _____________
insurer, National Grange Mutual Insurance Company ("National
Grange"), six months earlier for breach of contract in
refusing to pay his claim for underinsured motorist benefits
incurred during a July 1990 car accident, plaintiff-appellant
Daryl E. Porn brought this diversity action in Maine's
federal district court against National Grange seeking
additional damages for its alleged mishandling of his
underinsured motorist claim. The district court granted
summary judgment in favor of National Grange based on the
doctrines of collateral estoppel (issue preclusion) and res
judicata (claim preclusion), concluding that an issue
underlying one of Porn's claims had been decided in the
earlier proceeding and that all of Porn's claims could have
been raised therein. Porn appeals the district court's
summary judgment order. Finding no error, we affirm.
I. I. __
Background & Prior Proceedings Background & Prior Proceedings ______________________________
On July 17, 1990, Porn, a Connecticut resident, was
involved in an automobile accident in Portland, Maine, when
motorist Lori Willoughby sped through a stop sign and
broadsided his vehicle. Because his damages exceeded
Willoughby's $20,000 policy limit, Porn made a claim to
National Grange under his automobile policy seeking recovery
from the underinsured motorist indorsement to the policy.
-2- 2
For reasons not apparent in the record, National Grange
refused to pay the claim.
Disgruntled by this refusal, Porn wrote to National
Grange accusing it of bad faith in handling his claim and
threatening legal action. Porn sent copies of his letter to
the insurance commissioners of Connecticut and Massachusetts.
National Grange, unimpressed, remained steadfast in its
refusal to pay, and in November 1993, Porn filed suit against
National Grange in Maine's federal district court for breach
of the insurance contract ("first action").
Because Porn's policy with National Grange required
a finding of legal liability on the part of the underinsured
motorist as a condition precedent to the payment of benefits,
the two-day trial before the magistrate judge1 focused on the
question of Willoughby's negligence and Porn's contributory
negligence. Following the completion of the evidence, the
magistrate judge entered judgment as a matter of law for Porn
on the issue of contributory negligence, and the jury
returned a verdict for Porn, finding that Willoughby's
negligence had caused him $400,000 worth of damages. After
reducing the jury's award to reflect Porn's $300,000
underinsured motorist policy limit and appropriate set-offs,
the magistrate judge entered judgment for Porn in the amount
____________________
1. Under Fed. R. Civ. P. 73, the parties consented to the
magistrate judge, rather than the district judge, conducting
the jury trial.
-3- 3
of $255,314.40. The magistrate judge denied Porn's motion
for prejudgment interest, finding that while Maine law allows
prejudgment interest in excess of the policy limit where the
insurer acted in bad faith and needlessly prolonged the
litigation, Porn had presented no evidence that National
Grange exhibited such behavior.
Six months later, Porn commenced this action
against National Grange in Maine's federal district court
("second action"). This time Porn alleged that National
Grange's conduct in handling his underinsured motorist claim
constituted breach of the covenant of good faith, intentional
infliction of emotional distress, negligent infliction of
emotional distress, and violations of the Connecticut Unfair
Insurance Practices Act and the Connecticut Unfair Trade
Practices Act. National Grange moved for summary judgment,
arguing that the judgment in the first action precluded Porn
from bringing the second action. The district court accepted
that argument and granted summary judgment in favor of
National Grange on the grounds that (1) one aspect of Porn's
bad-faith claim was barred by issue preclusion and (2) all of
Porn's claims were barred by claim preclusion.
In reaching its first holding, the district court
explained that the magistrate judge's decision not to award
Porn prejudgment interest was based in part on his finding
that Porn had presented no evidence to suggest that National
-4- 4
Grange acted in bad faith and needlessly prolonged the
litigation. Accordingly, the court concluded that the
question of National Grange's alleged bad-faith conduct in
litigating the first action was raised and decided in the
first action, and, therefore, to the extent Porn's bad-faith
claim involved National Grange's conduct during the first
action, it was barred by issue preclusion.
In reaching its broader holding that all five of
Porn's claims were barred by claim preclusion, the district
court reasoned that once Porn chose to bring the first action
against National Grange for breach of contract, he was
required to raise all his claims arising from the breach or
else forfeit the right to do so. Because it found that
Porn's five tort and statutory claims, like the earlier
breach of contract claim, involved National Grange's
obligations arising under the insurance policy, the district
court concluded that they should have been brought in the
first action and therefore were barred by claim preclusion
from being raised in the second action.
II. II. ___
Analysis Analysis ________
Porn appeals the district court's grant of summary
judgment in favor of National Grange, arguing that the
judgment in the first action for breach of contract does not
preclude his bad-faith, emotional distress, and statutory
-5- 5
unfair practices claims (collectively "bad-faith claim")
against National Grange in this action. Specifically, Porn
argues that (1) the facts relevant to his bad-faith claim are
separate from those relevant to his contract claim, (2) the
bad-faith facts do not form a convenient trial unit with the
contract facts, (3) treatment of both sets of facts as a unit
does not conform to the parties' expectations, and (4) it was
inequitable to apply the res judicata bar where, as here, the
insurer's conduct in the contract litigation forms part of
the bad-faith action.2 After reciting the standard of review
and setting forth the governing res judicata law, we consider
each argument in turn.
We review a grant of summary judgment de novo, __ ____
under the same standards that govern the district court, to
determine whether "the pleadings, depositions, answers to
____________________
2. All of these arguments attack the district court's claim
preclusion holding. Porn also makes arguments challenging
the district court's conclusion that the portion of his bad-
faith claim relating to National Grange's conduct in the
first action was barred by issue preclusion. However, when
Porn commenced the first action, he knew that National Grange
had neither settled his benefits claim despite overwhelming
evidence that Willoughby alone caused the accident nor
conducted an independent investigation into the cause of the
accident in an attempt to offset Porn's evidence of
Willoughby's wrongdoing. Thus, we conclude that Porn could
have raised a bad-faith claim based on this evidence of
National Grange's litigation conduct in the first action and
could also have used National Grange's ensuing litigation
conduct as further evidence of that claim in the same action.
The claim therefore is barred by the doctrine of res judicata
(claim preclusion), see infra. Accordingly, we do not ___ _____
consider Porn's arguments regarding issue preclusion.
-6- 6
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law." Fed. R. Civ. P. 56(c); see ___
also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The ____ _____________ _______
applicability of the doctrine of res judicata is a question
of law subject to plenary review. Wolf v. Gruntal & Co., 45 ____ ______________
F.3d 524, 527 (1st Cir. 1995).
Because the judgment in the first action was
rendered by a federal court, the preclusive effect of that
judgment in the instant diversity action is governed by
federal res judicata principles. See Johnson v. SCA Disposal ___ _______ ____________
Servs., Inc., 931 F.2d 970, 974 (1st Cir. 1991) (noting in ____________
addition that the application of federal res judicata
principles allows federal courts to define the effect of
their own judgments); see also Apparel Art Int'l, Inc. v. ___ ____ _________________________
Amertex Enters. Ltd., 48 F.3d 576, 582-83, 583 n.7 (1st Cir. ____________________
1995). Under the federal law of res judicata, a final
judgment on the merits of an action precludes the parties
from relitigating claims that were raised or could have been
raised in that action. Allen v. McCurry, 449 U.S. 90, 94 _____ _______
(1980). For a claim to be precluded, the following elements
must be established: (1) a final judgment on the merits in
an earlier action, (2) sufficient identity between the causes
of action asserted in the earlier and later suits, and (3)
-7- 7
sufficient identity between the parties in the two suits.
See Apparel Art, 48 F.3d at 583; Gonzalez v. Banco Cent. ___ ___________ ________ ___________
Corp., 27 F.3d 751, 755 (1st Cir. 1994). Because there is no _____
dispute that the first and third elements of the test are
established, we focus on the second element: whether the
causes of action in the two lawsuits are sufficiently
identical.
In defining the cause of action for res judicata
purposes, this circuit has adopted the "transactional"
approach of the Restatement (Second) of Judgments. Manego v. ______
Orleans Bd. of Trade, 773 F.2d 1, 5 (1st Cir. 1985), cert. _____________________ _____
denied, 475 U.S. 1084 (1986). Under this approach, a valid ______
and final judgment in the first action will extinguish
subsequent claims "'with respect to all or any part of the
transaction, or series of connected transactions, out of
which the action arose.'" Id. (quoting Restatement (Second) ___
of Judgments 24 (1982)). We determine what factual
grouping constitutes a "transaction" pragmatically, giving
weight to such factors as "whether the facts are related in
time, space, origin, or motivation, whether they form a
convenient trial unit, and whether their treatment as a unit
conforms to the parties' expectations." Restatement 24;
see also Aunyx Corp. v. Canon U.S.A., Inc., 978 F.2d 3, 7 ___ ____ ___________ ___________________
(1st Cir. 1992), cert. denied, 507 U.S. 973 (1993). These _____ ______
factors, however, are merely suggestive; they are not
-8- 8
intended to be exhaustive, nor is any one factor
determinative. See Restatement 24 cmt. b; Gonzalez, 27 ___ ________
F.3d at 756. Finally, in making this determination, we are
mindful that a single transaction may give rise to a
multiplicity of claims, Gonzalez, 27 F.3d at 755, and ________
recognize that "the mere fact that different legal theories
are presented in each case does not mean that the same
transaction is not behind each," Manego, 773 F.2d at 6. ______
A. Consideration of the Restatement Factors ____________________________________________
With that background, we inquire whether the causes
of action asserted in the first and second suits are
sufficiently identical, focusing on the three Restatement
factors.
1. Relation of the Facts in Time, Space, Origin, _________________________________________________
or Motivation ___ __________
The first Restatement factor asks whether the facts
underlying the breach of contract and bad-faith claims are
related in time, space, origin, or motivation, i.e., whether ____
they arise out of the same transaction, seek redress for
essentially the same basic wrong, and rest on the same or a
substantially similar factual basis. See Kale v. Combined ___ ____ ________
Ins. Co. of Am., 924 F.2d 1161, 1166 (1st Cir.), cert. _________________ _____
denied, 502 U.S. 816 (1991). In this case, our answers to ______
these questions lead us to conclude that the facts underlying
the two claims are closely related.
-9- 9
First, we find that both the bad-faith claim and
the contract claim derive from the same occurrence: National
Grange's refusal to pay Porn the proceeds of his underinsured
motorist policy for the July 17, 1990, accident. Second,
although the two claims present different legal theories, one
sounding in contract and the other in tort, they both seek
redress for essentially the same basic wrong. For instance,
Porn's contract action sought redress for National Grange's
refusal to pay the policy proceeds, while his bad-faith
action sought redress for its unreasonable refusal to pay the
proceeds, see Buckman v. People Express, Inc., 530 A.2d 596, ___ _______ _____________________
599 (Conn. 1987). Third, a comparison of the two complaints
illustrates that the two claims rest on a similar factual
basis. Both complaints, in their factual allegations,
outline the circumstances of the accident, the particulars of
the insurance policy, and National Grange's conduct in
refusing to pay. In sum, the facts underlying the two claims
are closely related in time, space, origin, and motivation.3
____________________
3. A majority of the courts that have considered this
question, i.e., whether the facts underlying a breach of ____
insurance contract claim and a bad-faith claim are
sufficiently related for purposes of res judicata, also have
concluded that both claims arise out of the insurer's refusal
to pay the insured the proceeds of the policy. See, e.g., ___ ____
McCarty v. First of Ga. Ins. Co., 713 F.2d 609, 612 (10th _______ _______________________
Cir. 1983) (applying Oklahoma res judicata law); Duhaime v. _______
American Reserve Life Ins. Co., 511 A.2d 333, 334 (Conn. _________________________________
1986); Chandler v. Commercial Union Ins. Co., 467 So.2d 244, ________ _________________________
250 (Ala. 1985); Hubbell v. Trans World Life Ins. Co., 408 _______ __________________________
N.E.2d 918, 919 (N.Y. 1980); Stone v. Beneficial Standard _____ ____________________
Life Ins. Co., 542 P.2d 892, 894 (Or. 1975). Of the courts ______________
-10- 10
Porn expends considerable effort characterizing the
instant action as arising out of a transaction separate from
that giving rise to the first action. In particular, Porn
maintains that the bad-faith action stems from National
Grange's conduct in handling his insurance claim, whereas the
contract action stems from the circumstances surrounding the
car accident. Porn's definition of the two transactions out
of which the claims arise, however, is artificially narrow.
For instance, the contract claim arises out of more than the
car accident alone. It arises out of the accident in
conjunction with National Grange's refusal to pay under the
policy. Indeed, without the refusal to pay, no contract
breach could exist. Similarly, the factual basis of Porn's
bad-faith claim cannot be limited to National Grange's
conduct in handling Porn's insurance claim. In this case,
the facts of the car accident are also probative of National
Grange's reasonableness in refusing to pay Porn's claim. For
instance, if, as Porn suggests, the facts of the accident
____________________
holding otherwise, i.e., that the facts underlying the ____
contract and bad-faith claims are unrelated, most applied
state-law theories of res judicata that differ significantly
from the federal res judicata principles that govern this
case. See, e.g., Schmueser v. Burkburnett Bank, 937 F.2d ___ ____ _________ ________________
1025, 1031 (5th Cir. 1991) (applying Texas res judicata law);
Robinson v. MFA Mut. Ins. Co., 629 F.2d 497, 501-02 (8th Cir. ________ _________________
1980) (applying Arkansas's "primary rights" theory of res
judicata); Corral v. State Farm Mut. Auto. Ins. Co., 155 Cal. ______ ______________________________
Rptr. 342, 345 (Cal. Ct. App. 1979) (applying "primary
rights" theory); but see Rios v. Allstate Ins. Co., 137 Cal. ___ ___ ____ _________________
Rptr. 441, 445-46 (Cal. Ct. App. 1977) (reaching contrary
conclusion under "primary rights" theory).
-11- 11
present a clear picture that Willoughby was the legal cause
of the accident and Porn was not contributorily negligent,
National Grange would have had less reason to contest the
claim andtherefore its refusalto pay appearsless reasonable.4
Admittedly, each legal theory relies more heavily
on some of the underlying facts than others. The accident
facts, for example, will likely receive more emphasis in
proving the contract claim, while the facts regarding
National Grange's conduct in handling Porn's insurance claim
will be more focal in proving the bad-faith claim. However,
the Restatement makes clear that merely because two claims
depend on different shadings of the facts or emphasize
different elements of the facts, we should not color our
perception of the transaction underlying them, creating
multiple transactions where only one transaction exists.
Restatement 24 cmt. c. By focusing exclusively on the
facts most critical to each claim, Porn has ignored the other
____________________
4. Porn's argument that the facts underlying the bad-faith
and contract claims are not related in time is similarly
unpersuasive. Porn argues that the facts underlying the bad-
faith action go to National Grange's handling of the claim
after the car accident, while the facts underlying the _____
contract action go to the accident itself. However, as we
explained above, the factual basis of the contract action is
formed by more than just the accident; it also includes
National Grange's refusal to pay, and that refusal occurred
after the accident. Therefore, the facts underlying the
contract action cannot be limited to the accident itself but
extend to the time period after the accident as well, thereby
minimizing any time differential between the facts underlying
the two claims.
-12- 12
facts underlying each claim. Accordingly, we reject Porn's
grouping of the facts underlying the two claims into separate
transactions.
2. Trial Convenience _____________________
The second Restatement factor directs us to
determine whether the facts underlying the contract and bad-
faith claims form a convenient trial unit. This factor,
aimed at conserving judicial resources, provides that where
the witnesses or proof needed in the second action overlap
substantially with those used in the first action, the second
action should ordinarily be precluded. Restatement 24 cmt.
b. We conclude that Porn's bad-faith claim would use much of
the same evidence produced in the first action for breach of
the insurance contract, and therefore it would have been
convenient and efficient for the district court to have heard
the two claims in the same action.
Testimony and exhibits about the circumstances of
the accident are relevant to both the contract and bad-faith
claims. To establish that National Grange breached the
insurance policy in not paying his claim, Porn had to prove
that Willoughby's negligence caused the accident and that he
was not contributorily negligent. Accordingly, in the first
action, Porn presented evidence detailing the circumstances
of the accident. This evidence would likely have been
repeated in a second action for bad faith, as Porn would have
-13- 13
sought to portray the accident facts as so plainly
establishing Willoughby's negligence that National Grange had
no credible reason for refusing to pay his claim.
The evidence in the contract action and the second
action would also overlap as to the terms of Porn's
underinsured motorist policy and National Grange's refusal to
pay his claim. To prove breach of contract, Porn had to
establish that National Grange refused to pay his claim where
the terms of the policy so required. Likewise, the
reasonableness of National Grange's refusal to pay, i.e., ____
whether it acted in bad faith, depends on what the policy
required.
Rather than addressing the degree to which the
evidence supporting each claim overlaps, Porn challenges the
convenience of bringing the claims together on two other
grounds. First, Porn argues that evidence relevant to the
bad-faith claim, specifically evidence of the amount of
insurance available and the fact of settlement offers and
negotiations, would prejudice the insurer's defense of the
contract claim, and therefore the two claims do not form a
convenient trial unit. However, we agree with the district
court that any potential prejudice could be resolved by
bifurcating the trial. With bifurcation, the evidence common
to both claims, which was considerable, could have been
presented at once and not "in separate lawsuits commenced at
-14- 14
a distance of months or years." Porn v. National Grange Mut. ____ ____________________
Ins. Co., No. 95-140-P-H, 1995 WL 626374, at *3 (D. Me. Sept. ________
27, 1995).
Second, Porn argues that he had to procure a
judgment that National Grange breached the insurance contract
before the cause of action for bad faith could accrue and
therefore the bad-faith and contract claims could not be
joined in the same action. Porn bases this contention on an
assumption that, although a Connecticut court has yet to
decide this issue, it would follow jurisdictions like Florida
and require a judgment of contract breach as a condition
precedent to the pursuit of a bad-faith claim. See, e.g., ___ ____
Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So.2d 1289, _________ _______________________________
1290 (Fla. 1991) ("[A]n insured's underlying first-party
action for insurance benefits against the insurer necessarily
must be resolved favorably to the insured before the cause of
action for bad faith in settlement negotiations can
accrue.").5 The district court correctly observed, however,
that the Connecticut Supreme Court rejected this contention
in Duhaime v. American Reserve Life Ins. Co., 511 A.2d 333, _______ ______________________________
____________________
5. Porn's reliance on McAllaster v. Bruton, 655 F. Supp. __________ ______
1371, 1374 (D. Me. 1987), as additional support for this
proposition is sorely misplaced. McAllaster held that an __________
insurer could not be required to pay uninsured motorist
benefits without a prior judgment that the uninsured motorist
was liable. Id. at 1374-75. McAllaster does not address ___ __________
whether a judgment finding breach of the insurance policy is
a condition precedent to pursuit of a bad-faith claim.
-15- 15
334-35 (Conn. 1986). Invoking the doctrine of res judicata,
the Connecticut Supreme Court held that Duhaime's earlier
action for breach of the insurance policy barred a subsequent
action for bad faith. Id. In so holding, the court ___
implicitly acknowledged that a bad-faith action can accrue
without a separate judgment of contract breach. Although
Duhaime involved disability insurance and the instant case _______
involves underinsured motorist insurance, we see nothing
unique about underinsured motorist insurance that would
preclude Duhaime's holding from governing here.6 _______
3. Parties' Expectations _________________________
The final Restatement factor is whether treating
the underlying facts as a trial unit conforms to the parties'
expectations. For the following reasons, we conclude that it
does.
When he brought his contract suit in November 1993,
Porn knew the facts necessary for bringing a bad-faith claim.
He knew that National Grange had refused to pay; he knew its
alleged reasons for so refusing; and he knew the extent of
the delay in payment attributable to the refusal. Therefore,
____________________
6. In all events, in a bifurcated trial such as the district
court envisioned, see supra, the jury would first be asked to ___ _____
determine the breach of contract claim. Only if the insured
prevailed on that claim would the second (bad-faith) phase of
the trial transpire. Thus, the insured would have to secure
a finding that the insurer breached the contract before he
could recover on his bad-faith claim. We do not think that
the Connecticut Supreme Court would require more.
-16- 16
because the two claims arose in the same time frame out of
similar facts, one would reasonably expect them to be brought
together. See 18 Charles A. Wright & Arthur R. Miller, ___
Federal Practice and Procedure 4407, at 56 (1981) __________________________________
("Defendants may reasonably demand that disposition of the
first suit establish repose as to all matters that ordinary
people would intuitively count part of a single basic
dispute."). Indeed, in February 1993, nine months before
filing the first action, Porn wrote a letter to National
Grange in which he made a demand for his policy proceeds and
concomitantly threatened to sue for bad faith. In light of
this letter, it would not have been unreasonable for National
Grange to expect that any subsequent lawsuit that Porn
initiated would include claims for both breach of contract
and bad faith. Finally, bringing related claims together is
arguably more conducive to settlement and therefore, at least
in this case, may have had some pragmatic appeal.
In sum, applying the Restatement's transactional
test to this case, we conclude that the two lawsuits involved
sufficiently identical causes of action. Because the cause
of action should not have been split into two lawsuits,
Porn's bad-faith claim is barred by claim preclusion.
B. Equitable Exception _______________________
As his final argument, Porn contends that even if
we find that res judicata applies, equity demands its
-17- 17
suspension in this case. Specifically, Porn argues that
because National Grange's decision to proceed to judgment in
the contract action with no evidence to support its defense
("litigation conduct") is probative of bad faith, the full
nature of National Grange's bad-faith tort was not revealed
until judgment was entered in the contract action.
Therefore, Porn argues, it would be premature and unfair to
require him to bring his bad-faith claim together with his
contract claim.
The Supreme Court has counselled us to adhere to
traditional principles of res judicata and not to make any
"ad hoc determination of the equities in a particular case."
Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401 _____________________________ ______
(1981) (refusing to condone an exception to an application of
res judicata that would bar relitigation of an unappealed
adverse judgment where other plaintiffs in similar actions
against common defendants successfully appealed the judgments
against them). In a post-Moitie decision, however, this ______
court has suggested that an "'occasional exception' to claim
preclusion" may still exist in instances of "'unusual
hardship.'" Kale, 924 F.2d at 1168 (quoting Rose v. Town of ____ ____ _______
Harwich, 778 F.2d 77, 82 (1st Cir. 1985), cert. denied, 476 _______ _____ ______
U.S. 1159 (1986)); but see Johnson v. SCA Disposal Servs., ___ ___ _______ _____________________
Inc., 931 F.2d 970, 977 (1st Cir. 1991) (citing Moitie for ____ ______
the proposition that "we cannot relax the principles of claim
-18- 18
preclusion even if we find that the equities cry out for us
to do so"). Assuming arguendo that Moitie did not foreclose ________ ______
the possibility of an equitable exception, we find that, in
the context of this case, requiring the bad-faith claim to be
brought in the first action creates no unusual hardship for
Porn and therefore the exception does not apply.
First, we challenge Porn's assumption that
requiring the two claims to be brought together would
necessarily preclude as support for the bad-faith claim any
evidence about National Grange's decision to proceed to
judgment in the contract action with no evidence to support
its defense. Had the contract and bad-faith claims been
brought together, the district court would likely have
bifurcated the trial into two phases. By the time of the
bad-faith phase of the trial, the contract phase would
already have been completed and Porn would know both the
quality of evidence National Grange presented to defend the
contract claim and that the magistrate judge had granted
judgment as a matter of law for Porn on the issue of
contributory negligence. Accordingly, we see nothing that
would have prevented Porn from presenting this evidence in
the bad-faith phase of the trial and arguing to the jury that
National Grange's refusal to settle the contract action
-19- 19
despite insufficient evidence of a meritorious defense was
more evidence of its bad faith.7
Moreover, assuming arguendo that Porn's assumption ________
was correct and that at the time he brought the contract
action he was unaware of the litigation conduct that would
occur therein, we nonetheless conclude that Porn was aware of
other conduct by National Grange sufficient to support a bad-
faith claim. Indeed, of the ten factual allegations
supporting Porn's bad-faith complaint, nine were known to
Porn at the time he instituted the first action. For
instance, the second complaint alleged that National Grange
failed to act on the claim for nine months; failed to make an
offer on the claim for sixteen months; failed to allow Porn
to settle with Willoughby's carrier for the available
liability proceeds for two years; justified delays with the
possibility of other insurance coverage when it knew no such
insurance existed; made Porn investigate the possibility of
other coverage; failed to investigate the claim; repeatedly
lied to Porn about the policy's terms; and instructed its
claims personnel to withhold helpful information about the
____________________
7. Even if the trial had not been bifurcated and Porn did
not yet know that the magistrate judge would grant judgment
as a matter of law on the issue of contributory negligence,
Porn still could have pointed to National Grange's lack of
evidence of contributory negligence and argued that National
Grange's refusal to settle the contract case with such a
meager defense was more evidence of its bad faith. See supra ___ _____
note 2.
-20- 20
policy from Porn. Because the events underlying these
allegations had occurred by the time Porn brought his first
action, we find that Porn had ample opportunity to litigate
the bad-faith claim therein, see Gonzalez, 27 F.3d at 758 ___ ________
(holding that for claim preclusion to apply, a litigant first
must have had a full and fair opportunity to litigate her
claim), and his asserted inability to present evidence of
National Grange's litigation conduct as additional support
for his bad-faith claim does not present an
unusual hardship.
III. III. ____
Conclusion Conclusion __________
For the reasons stated above, we affirm the ______
district court's grant of summary judgment in favor of
National Grange.
-21- 21
Document Info
Docket Number： 95-2197
Filed Date： 8/23/1996
Precedential Status： Precedential
Modified Date： 9/21/2015