Allocation of claims where there is no coverage is useless
After being seriously injured in a car accident in Worthington, Minnesota, the complainant Alaaldeen Mussa sued the driver for negligence. When it became clear that the driver could not pay Mussa's medical bills, Mussa instead sought satisfaction from his claim from the driver's insurance provider, the Western Agriculture Insurance Company (Western Agriculture), in Minnesota District Court. Western Agriculture then filed a declaration lawsuit in South Dakota District Court to determine if there was coverage under the terms of the driver's insurance. After a two-day trial, the South Dakota District Court — and the South Dakota Supreme Court later confirmed — that the policy did not provide coverage. He was dissatisfied with the outcome of his appeal to South Dakota's Supreme Court and tried to try his case again in Minnesota.
I Alaaldeen Mussa v. Western Agricultural Insurance Company, et al. No. A21-0099, Court of Appeal of Minnesota (September 13, 2021), the court concluded that it had prevailed in South Dakota, Western Agriculture was entitled to have that judgment granted full faith and credit in Minnesota.
In the fall of 2013, Altayeb Arbab-Azzein and plaintiff Alaaldeen Mussa, both South Dakota residents working in Minnesota, were involved in a car accident near Worthington, Minnesota. Arbab-Azzein had driven Mussa and at least thirteen other colleagues to a manufacturing facility in Worthington when he crashed. Mussa suffered significant injuries and sued Arbab-Azzein in Minnesota District Court for negligence. At the time of the accident, Arbab-Azzein was insured by the respondent Western Agriculture. But after learning of the crash, Western Agriculture denied coverage.
Mussa and Arbab-Azzein entered into an Miller-Shugart agreement. [ Miller v. Shugart 316 N.W.2d 729 (Minn. 1982)]. In doing so, Arbab-Azzein sought to award Mussa $ 1,500,000 in favor of Mussa, and Mussa agreed to seek the satisfaction of that judgment from Western agricultural policy. Following the agreement, Mussa then sued Western Agriculture in Minnesota District Court for breach of contract, vicious refusal to settle and negligent procurement of insurance coverage.
Instead of continuing in the Minnesota action, Western Agriculture received a declaration judgment against Arbab-Azzein and Mussa in South Dakota. Despite his ongoing Minnesota claim, Mussa showed up and participated fully in the South Dakota campaign. The South Dakota District Court ruled that Western Agriculture had no contractual obligation to defend or indemnify Arbab-Azzein for claims arising from the motor vehicle accident. Mussa appealed this decision, but South Dakota's Supreme Court upheld it.
No further action was taken against Mussas Minnesota's claims until March 2020 after the South Dakota Supreme Court ruled in favor of the insurer.
Mussa's central argument is that the district court erred in giving the South Dakota judgment full faith and credit. Since the accident happened in Minnesota and the claim was brought in Minnesota District Court, Mussa claims that Minnesota law should apply. He further asked the Court of Appeal to conclude that Western Minnesota, in application of Minnesota law, is liable for compliance with the $ 1,500,000 sentence.
The district court did not err in granting the South Dakota judgment full faith and credit. .
In general, "every faith shall be ascribed to and credited with public acts, deeds and legal proceedings in every other State." USA Art. art. IV, § 1. Such a foreign judgment has the same effect and is subject to the same procedures, defense and procedures for resumption, eviction or stay as a judgment from a district court or the highest court in that state, and may be enforced or complied with in a similar manner. Exceptions from the granting of full faith and credit exist. A challenge to the execution of a foreign judgment cannot be used to attack that judgment in substance at once. And where the parties submit to the jurisdiction of the original forum, the parties can not later contest personal jurisdiction.
Mussa acknowledged that South Dakota had proper jurisdiction over the parties and the action and does not deny that he was able to participate fully in that case.
Although both claims were pending, Mussas' Minnesota district court claim remained dormant during the South Dakota proceedings. Since Mussa did not claim, and the minutes did not suggest, that the courts of South Dakota lacked jurisdiction, or that the judgment was obtained fraudulently or was already satisfied, or that Mussa's procedural rights were violated, his arguments were insufficient and the district court did not err in granting South Dakota judgment full faith and credit.
Res judicata and collateral estoppel exclude Mussa's remaining arguments.
In his remaining claims, Mussa claims that under Minnesota law, Western Agriculture is responsible for enforcing the judgment under the Miller-Shugart agreement reached by Arbab-Azzein and Mussa.
Res judicata, however, prevents subsequent disputes of a claim when:
- the previous claim concerned the same set of facts;
- the previous claim involved the same parties or their individuals;
- it was a final judgment on the merits; and
- the incumbent had a full and fair opportunity to try the matter.
Res judicata applies to claims that are actually sued and claims that could have been raised in the previous action. Collateral estoppel is narrower in scope and prevents the reproduction of a specific issue. A party is securely barred from resuming a question when the question is identical to that of a previous assessment; there was a final judgment on the merits; the suspended party was a party or in private with a party in the previous assessment; and the inflated party had a full and fair opportunity to be heard in the matter.
Here, the South Dakota judgment applied to the same facts as in Mussa's Minnesota District Court claim: Mussa, injured in a car accident, sought satisfaction of a certain judgment in the amount of $ 1,500,000 from Western Agriculture, the driver's insurance provider. The exact question was raised in both courts: whether Mussa was entitled to coverage under Arbab-Azzein's insurance. The South Dakota ruling was final and upheld by the South Dakota Supreme Court.
Finally, Mussa had the opportunity to participate fully and fairly in South Dakota disputes — even to the point of appealing to the South Dakota Supreme Court. As the elements of the res judicata and security provision were met, Mussa was prevented from resuming his claims regarding Western Agriculture's liability in Minnesota District Court.
A judgment of $ 1,500,000 that became uncountable resulted in the temptation to try a court at the scene of the accident. It failed because the recipient participated in the trial and possible appeal in South Dakota's Supreme Court. Mussa lost in a case that was heard and appealed and lost again when he tried to bring the same action in another court. The constitutional right that requires a state court to give full faith and honor to a sister state's judgment is impossible to overcome. When a party loses a lawsuit in a state, he has no right to try again in another court.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost as much for insurers and policyholders.
He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance and claims management attorney and more than 54 years in the insurance industry.
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