Davis & Sanchez v. U of U Health Care

This opinion is subject to revision before final
publication in the Pacific Reporter.
2015 UT 47IN THE
SUPREME COURT OF THE STATE OF UTAH
———————
DAVIS & SANCHEZ, PLLC,
Appellant,
v.
UNIVERSITY OF UTAH HEALTH CARE, STATE OF UTAH,
and JOHN and JANE DOES 1-10,
Appellees,
———————
No. 20130747
Filed April 21, 2015
———————
Third District, Salt Lake
The Honorable Robert Faust
No. 120903465
———————
Attorneys:
Robert B. Sykes, Alyson Carter, Rachel L. Sykes, John D.
Lauritzen, Salt Lake City, for appellant
Sean D. Reyes, Att’y Gen., Brent A. Burnett, Asst. Att’y Gen., Salt
Lake City, for appellees
———————
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in
which CHIEF JUSTICE DURRANT, JUSTICE DURHAM, JUSTICE PARRISH,
and JUDGE CHRISTIANSEN joined.
Having recused himself, JUSTICE DENO G. HIMONAS did not
participate herein; COURT OF APPEALS JUDGE MICHELE M.
CHRISTIANSEN sat.
———————
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶1 Davis & Sanchez, PLLC is a law firm that represented Al-
varo Diaz in a workers’ compensation claim against his employer,
Beehive Telephone. The firm filed Diaz’s claim in the Utah Labor
Commission in 2008. As a result of the firm’s efforts, the parties
were able to settle this claim. Under a settlement agreement en-
DAVIS & SANCHEZ v. U OF U HEALTH CARE et al.
Opinion of the Court
tered into by Diaz, Beehive, and the Workers Compensation Fund
of Utah (WCF), Diaz received a lump-sum disability payment,
part of which was earmarked for the firm as attorney fees. And
Beehive and WCF also agreed to pay Diaz’s medical bills, which
included bills from University of Utah Health Care.
¶2 In a series of subsequent filings, Davis & Sanchez has
sought to secure additional attorney fees from University of Utah
Health Care. In 2010, the firm filed an action in third district court
asserting a claim against University of Utah Health Care. In that
action, the firm alleged that University of Utah Health Care had
received substantial payments as a result of the firm’s efforts in
pursuing Diaz’s workers compensation claim, and asserted a right
to recover a percentage of those payments under a “common
fund” theory. See Barker v. Utah Pub. Serv. Comm’n, 970 P.2d 702,
707–13 (Utah 1998) (explaining the basis for a “common fund” fee
award). The district court dismissed that action on jurisdictional
grounds, concluding that the question of the availability of attor-
ney fees in a workers compensation case was a matter for the La-
bor Commission.
¶3 The Utah Court of Appeals affirmed. See Davis & Sanchez,
PLLC v. Univ. of Utah Health Care, 2011 UT App 419, 268 P.3d 851.
It concluded that the Labor Commission had jurisdiction to de-
termine the propriety of any attorney fee award arising out of a
workers compensation claim, citing Utah Code section 34A-1-
309(1). Id. ¶ 6. And it concluded, specifically, that “the law firm’s
claim that the hospital should . . . be required to contribute toward
the fees for the law firm’s services falls within the purview of” this
provision. Id. ¶ 7. Thus, the court of appeals held that “the law
firm should have filed an application with the Labor Commission
for an award of attorney fees payable by the hospital,” and it af-
firmed the dismissal of the Davis & Sanchez claim on the basis of
“[t]he law firm’s failure to first raise its attorney fee claim against
the hospital before the Labor Commission.” Id. ¶¶ 7, 9.
¶4 The firm did not seek review of that decision on certiorari in
this court. But neither did it abandon its efforts. It went back to
the Labor Commission, this time asserting a claim on its own be-
half against University of Utah Health Care, again arguing for a
right to recover fees on a “common fund” theory. The administra-
tive law judge dismissed that claim, concluding that the firm had
received all of the fees due under Utah Code section 34A-1-309(1).
2
Cite as: 2015 UT 47Opinion of the Court
¶5 Again the firm declined to seek further direct review. But it
remained undeterred. It filed yet another action—a further at-
tempt at a “common fund” claim in the third district court. And
again the third district court dismissed the claim. In line with the
earlier decision that had been affirmed by the court of appeals, the
district court dismissed the law firm’s claim on the ground that
the question of the availability of attorney fees on a workers com-
pensation claim was a matter for the Utah Labor Commission un-
der Utah Code section 34A-1-309(1). And because that question
had previously been resolved by the district court in a decision
affirmed by the Utah Court of Appeals, the district court also
deemed the matter barred under principles of res judicata.
¶6 This appeal followed. We review the district court’s deci-
sion dismissing Davis & Sanchez’s claims de novo, affording no
deference to the district court’s analysis. See Glaittli v. State, 2014
UT 30, ¶ 8, 332 P.3d 953. And we affirm.
¶7 As is evident from the procedural history recounted above,
the “common fund” claim dismissed and presented for our re-
view on this appeal was hardly Davis & Sanchez’s first attempt at
such a claim. The firm first asserted a common fund claim against
University of Utah Health Care in the third district court action it
filed in 2010. That claim was dismissed by the district court on ju-
risdictional grounds—as barred by Utah Code section 34A-1-
309(1). And the court of appeals affirmed on the same ground,
holding that section 309(1) provided the sole avenue (in an admin-
istrative proceeding in the Labor Commission) for an award of
attorney fees in connection with a workers compensation proceed-
ing, and concluding that “the law firm should have filed an appli-
cation with the Labor Commission for an award of attorney fees
payable by the hospital.” Davis & Sanchez, 2011 UT App 419, ¶ 7.
¶8 These were final decisions. And the proceedings that led to
them afforded Davis & Sanchez a full and fair opportunity to liti-
gate the question whether the firm’s exclusive avenue for seeking
fees from University of Utah Health Care was an administrative
proceeding under section 309(1). The 2011 decision of the third
district court (as affirmed by the court of appeals) is accordingly
preclusive, and bars the firm from relitigating the same issues in
this proceeding. See Snyder v. Murray City Corp., 2003 UT 13, ¶ 35,
73 P.3d 325 (stating the doctrine of issue preclusion bars relitiga-
tion of same issues by the same parties or their privies in a second
3
DAVIS & SANCHEZ v. U OF U HEALTH CARE et al.
Opinion of the Court
suit where the issue was fully and fairly litigated and the first ac-
tion resulted in a final decision).
¶9 The elements of the doctrine of issue preclusion are amply
satisfied in this case. First, there is no question of identity of par-
ties. Davis & Sanchez was the plaintiff in both suits, and Universi-
ty of Utah Health Care was the defendant.
¶10 Second, the identical issue was presented in both suits. In
this case as in the earlier proceeding, Davis & Sanchez asserted a
claim for attorney fees under a “common fund” theory, and the
threshold question presented concerns the jurisdictional effect of
Utah Code section 34A-1-309(1)—whether that provision required
Davis & Sanchez to assert its “common fund” claim in its earlier
Labor Commission filing or whether such claim could be ad-
vanced separately in the district court. That question, in fact, is at
the heart of the briefing in both proceedings.
¶11 The briefs filed in the 2011 court of appeals proceeding are
strikingly similar to the briefs presented in this case. In both cases
Davis & Sanchez asserted that the governing statute does not
grant jurisdiction to the Labor Commission to regulate the fees
owed by third-party beneficiaries to workers compensation set-
tlements. Instead, Davis & Sanchez argued in both cases that sec-
tion 309(1) governs only those fees as between an attorney and the
injured worker.
¶12 Third, Davis & Sanchez had a full and fair opportunity to
litigate the matter in the proceedings that led to the 2011 decisions
by the third district and by the court of appeals. Those decisions
resolved the legal question of the jurisdictional effect of section
309(1). And Davis & Sanchez had every opportunity to assert the
basis and grounds for its position on that issue—in briefing and
argument to the district court and again on appeal.
¶13 Fourth, the 2011 decision by the district court was unques-
tionably final. Such finality, moreover, was further cemented by
the court of appeals’ affirmance of the district court’s decision. See
Sevy v. Sec. Title Co. of S. Utah, 902 P.2d 629, 633 (Utah 1995) (hold-
ing a court of appeals decision final for purposes of issue preclu-
sion where it was “not further appealed or remanded, nor was it
determined on the basis of an unrelated procedural issue”). The
court of appeals conclusively held that an administrative proceed-
ing under section 309(1) was the exclusive avenue for Davis &
4
Cite as: 2015 UT 47Opinion of the Court
Sanchez to pursue its claim for attorney fees against University of
Utah Health Care, affirming the dismissal of the “common fund”
claim on the ground that the firm had failed to seek such recovery
in its initial proceeding in the Labor Commission. Davis & Sanchez,
2011 UT App 419, ¶¶ 9–10.
¶14 That final decision was preclusive. The firm’s sole avenue
for challenging it was a petition for writ of certiorari in this court.
By failing to file such a petition, the firm forfeited its right to chal-
lenge the final decisions rendered in 2011—the decision of the dis-
trict court, and the affirmance by the court of appeals. The claim
dismissed in this action—and presented for our review on this
appeal—is an attempt at a second bite at the apple. That attempt is
squarely foreclosed by the doctrine of issue preclusion.
¶15 The preclusive effect of the 2011 litigation cannot be avoid-
ed, as Davis & Sanchez suggests, by the fact that the decisions in
that case were not “on the merits.” That formulation is sometimes
articulated as a separate element of the doctrine of issue preclu-
sion. Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 29, 194 P.3d 956 (stat-
ing that, for issue preclusion, “the first suit must have resulted in
a final judgment on the merits”); Snyder, 2003 UT 13, ¶ 35 (same).
But the notion that only “merits” decisions are issue-preclusive is
misleading. A more precise formulation focuses simply on the
identity of the issues presented in both cases. If the same issue pre-
sented in subsequent litigation was finally resolved in an earlier
case involving the same parties (and otherwise meeting the ele-
ments of issue preclusion), then further litigation of that issue is
barred—even if the issue is a threshold matter of jurisdiction, and
does not go to the “merits” of the underlying dispute. Bailey v.
Deseret Fed. Savs. and Loan, 701 P.2d 803, 805 (Utah 1985) (“[A] de-
termination of lack of jurisdiction is res judicata on the issue of
jurisdiction . . . .”); McCarthy v. State, 265 P.2d 387, 389 (Utah
1953) (“[A] judgment of dismissal for want of jurisdiction is con-
clusive as to the matters upon which the ruling was necessarily
based.”); 18A CHARLES ALAN WRIGHT & ARTHUR R. MILLER,
FEDERAL PRACTICE AND PROCEDURE § 4435 (2d ed. 2002) (“[S]uch
dismissals [for lack of jurisdiction] generally do preclude relitiga-
tion of the underlying issue of jurisdiction . . . .”).
¶16 We resolve this case on that basis. We affirm the dismissal
of the viability of the Davis & Sanchez “common fund” claim on
the ground that such claim was deemed foreclosed by Utah Code
5
DAVIS & SANCHEZ v. U OF U HEALTH CARE et al.
Opinion of the Court
section 34A-1-309(1) in final judicial decisions rendered in prior
litigation. In so concluding, we need not and do not reach the
question whether we agree with the 2011 decisions as to the prop-
er interpretation of section 309(1) and its effect on claims like that
at issue here. Instead we simply conclude that Davis & Sanchez
has already had its day in court on that question, and that further
litigation of the matter is barred by the doctrine of issue preclu-
sion.
________________
6