A Jury Verdict as to Liability is a Final Determination for Issue Preclusion Purposes

In Bryan v. State Farm MutualAutomobile Insurance Co, the Court of Special Appeals held that a finding of liability in a prior action serves to preclude relitigation of that issue in subsequent litigation between the same parties, even though the prior case was settled prior to the entry of judgment.

            Brenton Bryan (“Bryan”) was driving in a car with his wife and two children (“Passengers”) near Freeport, New York. Bryan’s vehicle swerved and collided with two other vehicles (“Accident”). Juan Chevez was driving one of those vehicles, accompanied by his wife. The Chevezes filed suit in the Supreme Court of New York, alleging that Bryan’s negligence caused the Accident.

            At trial, both parties were represented by counsel, and the issue of damages was bifurcated from the issue of liability. After hearing testimony from both Chevez as well as Bryan and his wife, the issue of liability was submitted to the jury, which found Bryan  negligent in causing the Accident. However, before judgment could be entered as to damages, the parties settled.

            Bryan and the Passengers had already filed suit in the Circuit Court of Maryland for Montgomery County, claiming that the Accident was caused by a “phantom driver” and as a result, that they were entitled to UM benefits from State Farm. Following the settlement of the New York case, State Farm moved for summary judgment, arguing that the New York jury verdict finding Bryan liable for causing the Accident collaterally estopped both Bryan and the Passengers from succeeding on their claims. The Circuit Court granted State Farm’s motion for summary judgment as to both Bryan and the Passengers.

The Maryland Court of Special Appeals affirmed in part and reversed in part. The Court held that the New York jury verdict as to Bryan’s liability precluded relitigation of that issue with respect to Bryan, treating the verdict as a final determination for purposes of claim preclusion; however, the court reasoned that the New York verdict did not preclude the Passengers from relitigating the issue of Bryan’s liability.

            In reaching its conclusion as to Bryan, the court stressed that its decision turned on the question of whether “there was a final judgment on the merits” in the previous action, which is the second element of the four-part test used by Maryland courts to determine if a party is collaterally estopped from bringing a claim. With respect to the “final judgment” requirement, the court distinguished between the traditional approach, which does not give preclusive effect to a jury verdict, and the modern approach. The Court of Special Appeals ultimately endorsed the modern view, which considers the ‘final judgment’ requirement satisfied by “any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.”

            Conversely, the Court of Special Appeals concluded that the Passengers were not precluded from relitigating the issue of Bryan’s liability for the accident. The court cited to longstanding Supreme Court doctrine in explaining that, because the New York jury verdict was adverse to the Passengers and they did not have the opportunity to appear and present evidence in the prior action, giving the prior judgment preclusive effect as to the Passengers would amount to a denial of Due process.

Article Contributed by Derrick Dye