Finality of Judgment: Issue Preclusion, Claim Preclusion, and Law of the Case - July 2006 - the Civil Litigator
| Publication year | 2006 |
| Pages | 43 |
2006, July, Pg. 43. Finality of Judgment: Issue Preclusion, Claim Preclusion, and Law of the Case - July 2006 - The Civil Litigator
July 2006
Vol. 35, No. 7 [Page 43]
The Civil Litigator
Finality of Judgment: Issue Preclusion, Claim Preclusion, and Law of the Case
by Diane Vaksdal Smith
The Civil Litigator column addresses issues of importance and interest to litigators and trial lawyers practicing in Colorado courts. The Civil Litigator is published six times a year.
Column Editors:
Don Kelso, Denver, of Holme Roberts & Owen LLP - (303) 861-7000, kelsod@ hro.com; Eric Bentley, Colorado Springs, of Holme Roberts & Owen LLP - (719) 381-8400, bentlee@hro.com
This month's article was written by Diane Vaksdal Smith, Englewood, a shareholder of Burg Simpson Eldredge Hersh & Jardine, P.C. - dsmith@burgsimpson.com.
A judgment in a case may or may not affect pending litigation. To understand whether there is an impact and what that impact might be, it is necessary to fully understand the concept of finality of judgment.
Colorado law establishes three interrelated doctrines regarding the finality of judgment: issue preclusion, claim preclusion, and law of the case.(fn1) Issue preclusion, formerly referred to as collateral estoppel, is a derivative of the doctrine of claim preclusion, formerly referred to as res judicata.(fn2) Claim preclusion and law of the case belong to the same family of principles contemplating the termination of an issue when it arises again in the same case (for law of the case) or in subsequent, related litigation (for claim preclusion).(fn3)
Though frequently confused, each of these doctrines applies in different circumstances and requires proof of different elements. This article examines the purposes and elements of each of these doctrines. Additionally, it examines selected cases where the doctrines have been applied or rejected, as well as the reasoning of the decisions.
Issue Preclusion
The doctrine of issue preclusion or collateral estoppel provides that a court's final decision on an issue actually litigated and necessarily decided in a previous suit is conclusive of that issue in a subsequent suit.(fn4) This doctrine is "intended to relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication."(fn5)
Issue preclusion is both broader and narrower than claim preclusion - broader in that it applies to claims for relief different from those litigated in the first action and narrower in that it applies only to issues actually litigated.(fn6) Issue preclusion is treated as an affirmative defense that ordinarily must be pled in the answer, as provided in C.R.C.P. 8(c).(fn7) However, in some instances, an affirmative defense asserted for the first time in a motion for summary judgment will be deemed incorporated into the answer.(fn8) The burden of establishing the elements of issue preclusion rests with the party asserting preclusion.(fn9)
Although issue preclusion typically is explained in the context of "adjudication," an issue decided on a motion for summary judgment can preclude re-litigation of that issue in a subsequent proceeding.(fn10) Further, although originally developed in the context of judicial proceedings, issue preclusion also can apply to preclude re-litigation of issues decided in arbitration.(fn11) Moreover, issue preclusion is just as viable in administrative proceedings and can bind parties to an administrative agency's findings of fact and conclusions of law if the agency, while acting in a judicial capacity, resolved disputed issues of fact and the parties had an adequate opportunity to litigate those issues.(fn12) However, the application of claim preclusion can be tempered by the courts' recognition that "compelling reasons may exist not to apply collateral estoppel where proceedings are tailored to promote prompt, inexpensive adjudication of smaller claims."(fn13)
Elements of Issue Preclusion
In Colorado, issue preclusion bars re- litigation of an issue if:
1) the issue precluded is identical to an issue actually determined in the prior proceeding;
2) the party against whom estoppel is sought was a party to or was in privity with a party to the prior proceeding;
3) there was a final judgment on the merits in the prior proceeding; and
4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issues in the prior proceeding.(fn14)
Actually Determined: With respect to the first element, the issue to be precluded must be identical to the issue that was actually determined in the prior action.(fn15) The Colorado Supreme Court has defined the scope of the "actually determined" element by looking to whether the issue was "actually raised and necessarily adjudicated."(fn16) For an issue to be actually raised, a party by appropriate pleading must have asserted the issue through a claim or cause of action against the other party.(fn17) If an issue could have been raised but was not, issue preclusion is inapplicable.(fn18) Also, the issue actually raised must have been submitted for determination and then actually determined by the adjudicatory body.(fn19) An issue is necessarily adjudicated when a determination on the issue is necessary to a judgment.(fn20)
Party or Non-Party in Privity: Issue preclusion can be asserted against a party or a non-party in privity; issue preclusion cannot be asserted if the defendant was neither a party nor in privity with a party.(fn21) Privity exists when there is a substantial identity of interests between a party and a non-party such that the non-party is virtually represented in litigation.(fn22) At a minimum, a party seeking to show privity must show that the parties in the two actions are really and substantially the same in interest.(fn23)
In Bennett College, the Colorado Supreme Court had to determine whether the parties (a trust and a trustee in bankruptcy) were in privity for purposes of the application of issue preclusion. As explained there, "a privy is one who, after rendition of judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by successor, inheritance, or purchase."(fn24) There, the bankruptcy trustee was deemed to be the privy of the debtor, and issue preclusion applied.
Finality: For the purposes of issue preclusion, the concepts of final...
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