Bonniwell v. Beech Aircraft Corp. , 27 Tex. Sup. Ct. J. 140 ( 1984 )

ON MOTION FOR REHEARING

RAY, Justice.

We grant the petitioners’ motion for rehearing. Our former opinion and judgment of March 9, 1983, are withdrawn and the following opinion is substituted.

This is an appeal from one of five lawsuits arising from an airplane crash. At issue is the applicability of the related doctrines of res judicata and collateral estop-pel. The trial court rendered summary judgment on the basis that a judgment rendered in a prior suit involving the same defendants was res judicata of the co-defendants’ cross-actions for contribution and indemnity. The court of appeals affirmed. 633 S.W.2d 553. Finding error in part of the court of appeals’ judgment, we reverse and remand in part and affirm the remainder.

FACTS

On April 30, 1974, a Metroflight airplane crashed in Galveston County shortly after take-off. The crash occurred because the aileron and elevator controls were locked in a fixed position by a pin left in the control column at the time of take-off. Metrof-light, Inc. (Metro), the operator of the airplane, had purchased it from Shawnee Airlines, Inc. (Shawnee), the original owner. Beech Aircraft Corporation (Beech) had manufactured the airplane.

Five lawsuits were filed in connection with the accident. The prior judgment considered to be res judicata of the defendants’ cross-actions in this case was rendered in Wilcox v. Metroflight, Inc. No appeal was taken from that judgment. In both the present case and the Wilcox case, Metro, Shawnee and Beech were joined as defendants under claims for wrongful death and personal injury. Metro and Shawnee were sued under a negligence theory. Beech was sued under theories of negligence and strict liability. In both suits, each defendant filed cross-actions for indemnity or contribution against the other defendants. In the Wilcox case, the plaintiffs settled with Metro prior to trial, and took a nonsuit. Metro then nonsuited Beech on Metro’s cross-claim, but remained a party because of Beech’s and Shawnee’s cross-actions against it.

The Wilcox jury found Metro and Shawnee negligent, and this negligence was further found to be a proximate cause of the Wilcox plaintiffs’ injuries. The jury failed to find Beech either negligent or responsible for a design defect in the control lock system. In response to a special issue requesting the jury to determine the comparative negligence of the defendants, the jury apportioned 75% of the fault to Metro’s negligence and 25% of the fault to Shawnee’s negligence. In conformity with their earlier findings in Beech’s favor, the jury apportioned no fault to Beech. Based upon the jury’s verdict, the trial court rendered judgment against Shawnee for 25% of the plaintiffs’ damages. The Wilcox judgment also recited that all plaintiffs had settled with and released all claims against Metro. Since Beech had not been found liable, the judgment denied Beech’s cross-action against Metro for contribution or indemnity-

The case from which this appeal arises, “Bonniwell,” was to be tried next. Prior to trial, Beech moved for summary judgment on its cross-action against Metro and Shawnee and on Metro’s cross-action against Beech. Beech asserted the Wilcox case had determined issues identical to Bonniwell with respect to the defendants’ cross-actions, and therefore precluded relitigation of those issues. Beech’s motion for summary judgment was granted and judgment was rendered awarding Beech indemnity from Metro and Shawnee in the event Beech was found liable to the Bonniwells. The summary judgment also denied Metro and Shawnee any relief under their respective cross-actions against Beech.

Metro and the Bonniwells brought this appeal in which Shawnee did not participate. Although the summary judgment adjudicates rights only among the defendants on their respective cross-actions, the Bonni-wells, the plaintiffs in the present suit, are parties to this appeal because of a stipulation agreement. The stipulation recognizes the validity of a settlement agreement entered into by the Bonniwells with Metro and also provides that the Bonniwells will be bound by the summary judgment if affirmed on appeal.

BEECH’S CROSS-ACTION FOR INDEMNITY

The court of appeals has affirmed the summary judgment granting Beech’s cross-action for indemnity against Metro and Shawnee and denying Metro’s cross-action for indemnity or contribution. The court has held that the judgment in Wilcox is res judicata as to Beech’s and Metro’s cross-claims against each other in the present suit.

Res judicata is frequently characterized as claim preclusion because it bars litigation of all issues connected with a cause of action or defense which, with the use of diligence, might have been tried in the prior suit. Russell v. Moeling, 526 S.W.2d 533, 536 (Tex.1975). When a prior judgment is offered in a subsequent suit in which there is identity of parties, issues and subject matter, such judgment is treated as an absolute bar to retrial of claims pertaining to the same cause of action on the theory that they have merged into the judgment. Texas Water Rights Com’n v. Crow Iron Works, 582 S.W.2d 768, 771 (Tex.1979); Abbott Laboratories v. Gravis, 470 S.W.2d 639, 642 (Tex.1971).

The prior judgment in Wilcox, however, denied Beech’s indemnity claim. Although the court of appeals in our present case speaks in terms of res judicata and refers to the judgment in Wilcox, the court actually applies principles of collateral es-toppel in affirming the award of indemnity to Beech. Collateral estoppel is narrower than res judicata. It is frequently characterized as issue preclusion because it bars relitigation of any ultimate issue of fact actually litigated and essential to the judgment in a prior suit, regardless of whether the second suit is based upon the same cause of action. Wilhite v. Adams, 640 S.W.2d 875, 876 (Tex.1982); Benson v. Wanda Petroleum Company, 468 S.W.2d 361, 362 (Tex.1971). Under principles of collateral estoppel the court of appeals reasons that Beech and Metro have fully litigated their relative liability and that the findings of the Wilcox jury are binding on the cross parties in all subsequent litigation arising out of the accident. The court of appeals concludes that Beech is entitled to indemnity in this case because Beech was absolved of all liability in Wilcox.

We, however, have found no issue in Wilcox supporting Beech’s claim to indemnity. The mere fact that the Wilcox plaintiffs did not obtain findings that Beech was either negligent or strictly liable does not establish Beech’s right to indemnity. Furthermore, the judgment in Wilcox denied Beech’s cross-claim for indemnity and contribution. The only issues pertaining to Beech which were essential to the Wilcox judgment were findings that Beech was neither negligent nor strictly liable. Since Beech was not found negligent, there was no reason to include Beech in the comparative negligence issue. The comparative negligence issue relates solely to the cross-actions for contribution. Contribution is available only to a joint tortfeasor. Since Beech was found not to be a joint tort-feasor, no purpose was served by including Beech in the comparative negligence issue.

A party seeking to invoke the doctrine of collateral estoppel must establish (1) the facts sought to be litigated in the second action were fully and fairly litigated in the prior action; (2) those facts were essential to the judgment in the first action; and (3) the parties were cast as adversaries in the first action. Benson v. Wanda Petroleum Company, 468 S.W.2d 361; Restatement (Second) of Judgments § 27 (1982). We conclude that principles of collateral estop-pel do not support Beech’s claim for indemnity, because the issue comparing Beech’s negligence vis-a-vis Metro and Shawnee was not essential to the judgment rendered in Wilcox.

THE BONNIWELLS’ CAUSE OF ACTION

The Bonniwells have settled with Metro and have agreed to indemnify Metro from any further liability. An award of indemnity to Beech in the present suit would therefore operate directly against the Bonniwells and eliminate their cause of action against Beech. This is because any judgment the Bonniwells obtain against Beech will be collected from Metro who in turn must be reimbursed by the Bonniwells.

In Benson v. Wanda Petroleum Company, 468 S.W.2d 361, 363 (Tex.1971) we said that “[d]ue process requires the rule of collateral estoppel operate only against persons who have had their day in court either as a party to the prior suit or as a privy .... ” The Bonniwells have not had their day in court against Beech, nor are they in privity with any party who actually litigated the comparative negligence issue in Wilcox.

The only parties who actually had an interest in litigating the comparative negligence issue were the Wilcox plaintiffs, and defendants, Beech and Shawnee. Although Metro remained a party in Wilcox for purposes of contribution under Art. 2212a, Metro had no reason to litigate its comparative negligence because it had obtained a contractual right to indemnity through its settlement with the Wilcox plaintiffs.

The Bonniwells were not represented in Wilcox. They were not in privity with any party who actually litigated the comparative negligence issue, nor were they in privity with Metro, who in any event had no reason to litigate the issue. The mere fact that the Wilcox plaintiffs did not obtain findings that Beech was either negligent or strictly liable does not establish Beech’s right to indemnity and should not operate to foreclose the Bonniwell’s cause of action against Beech.

METRO’S CROSS-ACTION FOR INDEMNITY OR CONTRIBUTION

The court of appeals has also affirmed that part of the summary judgment denying Metro’s cross-action for contribution or indemnity. This part of the summary judgment is correct because Metro has no right to indemnity or contribution as a matter of law.

At the time the summary judgment was rendered, a joint tortfeasor’s right to contribution was a purely statutory right. Lubbock Manufacturing Co. v. Perez, 591 S.W.2d 907, 922 (Tex.Civ.App.—Waco 1979, no writ); TEX.REV.CIV.STAT.ANN. arts. 2212 and 2212a. Neither article 2212 nor article 2212a provides any right of contribution to a joint tortfeasor who has settled the plaintiff’s claim. Contribution is no longer a purely statutory right. In Duncan v. Cessna Aircraft Company, 26 Tex.Sup. Ct.J. 507 (July 16, 1983), we recognized a prospective, common law right to contribution between negligent and strictly liable joint tortfeasors. Although we approved contribution by comparative causation in Duncan, we did not extend the right of contribution to a settling party. The settlement agreement which released Metro from all liability extinguished Metro’s right to contribution.

Metro also has no right to indemnity at common law. Article 2212a has abolished the common law doctrine of indemnity between negligent joint tortfeasors. Cypress Creek Utility Service Co. v. Muller, 640 S.W.2d 860, 864 (Tex.1982); B & B Auto Supply v. Central Freight Lines, Inc., 603 S.W.2d 814, 816-17 (Tex.1980). In Duncan, we likewise impliedly abolished the common law doctrine of indemnity between joint tortfeasors in strict liability cases.

Only a vestige of common law indemnity remains. In B & B Auto Supply, we recognized the survival of common law indemnity with respect to liability of a purely vicarious nature. An analogous indemnity right survives in products liability cases to protect the innocent retailer in the chain of distribution. This is all that remains of the common law doctrine of indemnity. Metro has no right to indemnity at common law regardless of whether Beech is found negligent or strictly liable.

In summary, we hold that Metro has no right to contribution or indemnity as a matter of law. We further hold the issues decided in Wilcox do not establish that Beech is entitled to indemnity from Metro. The portion of the summary judgment awarding Beech indemnity against Metro is reversed and that part of the cause is remanded to the trial court for further proceedings by the Bonniwells against Beech. The remainder of the summary judgment is affirmed.

Dissenting opinion by McGEE, J., in which BARROW and KILGARLIN, JJ., join.