Summary
noting permissive nature of counterclaims in small claims cases, but ruling that "defendants must be cognizant of the fact that those issues which are finally determined will be binding upon all future claims which arise from the same incident, involving the same parties"
Summary of this case from Doyle v. BaltaksOpinion
October 31, 1989.
Present: Black, P.J., Shubow Dolan, JJ.
Negligence, Res. judicata; Motor vehicle accident. Rules of Court, Uniform Small Claims Rule 3(c).
Report of court's dismissal of plaintiff's report. Summary judgment motion allowed in the Hingham Division by Alvin C. Tamkin, J.
William J. Flynn, Jr., for the plaintiff.
Maureen H. McManus for the defendant.
This appeal arises out of the defendant's motion for summary judgment which the court allowed. The case before us is a tort action for personal injuries and property damage resulting from a motor vehicle accident.
Defendant Ford had been the plaintiff in an earlier small claims action against plaintiff Donovan (defendant in the prior action) in which Ford sought costs incurred in renting an automobile while his own was being repaired after the accident (the same accident upon which the case before us is based). Donovan failed to appear on the day of trial in small claims court and subsequently suffered a default judgment on that claim. That judgment has been fully satisfied by Donovan.
The court ruled in the present case that because Donovan defaulted in the previous small claims action he is barred on issue preemption (res judicata) grounds from bringing another claim which arises from the same accident. In this connection Rule 3(c) of the Uniform Small Claims Rules provides that a defendant's counterclaims are not compulsory. It would appear, therefore, that a defendant having a counterclaim within the jurisdiction of the small claims court yet choosing not to assert such claim would not be precluded from bringing such claim in the future.
Plaintiff Donovan's property damage claim arises from a motor vehicle accident and therefore would not be subject to the jurisdictional amount limitation. G.L.c. 218, § 20.
Under the doctrine of issue preclusion, "[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties whether on the same or different claim." Craig v. American Manufacturers Mutual Insurance Co., 1980 Mass. App. Div. 143 (1980) [citing RESTATEMENT 2d OF JUDGMENTS, § 27 (1982)]. A default judgment is in every sense a final adjudication. Harris v. Tri-Cities Fabricating Co., Inc., 57 Mass. App. Dec. 11 (1975). It acts as a bar to further action by any of the parties involved as to all matters and issues that could have been determined in the case in which the default judgment was entered. Id. Were it otherwise, a defendant in a small claims action, contemplating a separate civil action against the small claims plaintiff, could frustrate the rule regarding issue preemption by intentionally defaulting and reserving the right to relitigate the same issues all over again. Such a rule would also defeat the legislative intent of speedy and final resolution of matters within the scope of the small claims statute. McLaughlin v. Municipal Court of Roxbury Dist. of City of Boston, 308 Mass. 397 (1941).
Donovan may not relitigate the issue of negligence. When the small claims procedure allows recovery against the tort-feasor for damages, negligence of the defendant is actually litigated and determined by the court and is essential to that court's judgment, so that the small claims court judgment may be given effect under the doctrine of issue preclusion in a subsequent suit. Cousineau v. Laramee 388 Mass. 859 (1983). Prohibiting any challenge to the small claims finding on the negligence issue essentially bars any claims for bodily injury and property damage unless Donovan proceeds under a different theory of law.
An argument may be made that Donovan would have lost his rights to appeal if he had asserted his counterclaims in small claims court. See District Court Standards of Judicial Practice, Small Claims, commentary to § 7.06. However, his rights to remove the case to the civil docket would still have been available. "In view of the requirement that the decision in the District Court is to be given prima facie effect in subsequent jury trials, and the clear statutory mandate that small claims procedure be an alternative nonexclusive remedy, a judge should rarely, if ever, exercise his discretion to prevent removal." Daum v. Delta Airlines, 396 Mass. 1013, 1014 (1986).
Despite the permissive nature of counterclaims in small claims court, defendants must be cognizant of the fact that those issues which are finally determined will be binding upon all future claims which arise from the same incident, involving the same parties. Given the right of the defendant to seek removal of small claims cases to the civil docket, prudence requires that he or she prosecute all possible counterclaims diligently else suffer issue preclusion.
The small claims procedure is designed to provide persons with a simple forum in which to adjudicate their disputes. If we allow defendants to relitigate issues previously decided in small claims court, the intent of the Legislature to create a speedy and informal proceeding for the adjudication of property damage would be frustrated.
A review of rule 3(c) of the Small Claims Rules in conjunction with applicable case law and the record before us leads this court to the conclusion that the issue of Donovan's negligence has been decided by the small claims court and is precluded from relitigation in the present case. Summary judgment for defendant Ford was, therefore, properly granted on these grounds.
There being no prejudicial error, the report is dismissed.
Concurring Opinion
I join in Justice Black's opinion and add by way of concurrence that in my view Justice Dolan has not distinguished between the right to bring a counterclaim on issues not foreclosed by the default and the right to bring a counterclaim on a premise already resolved, namely the negligence of the parties.
Dissenting Opinion
I respectfully dissent from the majority opinion.
The court ruled in the present case that because Donovan defaulted in the previous small claims action he is barred on res judicata grounds from bringing another action arising from the same accident. This would be true if Donovan were required by the rules to bring any and all counterclaims he might have had in small claims proceedings else suffer possible issue preclusion of any future claims arising from the same incident. Such is not the case.
A specific court decision on the res judicata effect of a determination of defendant's negligence by the small claims court has not as yet been rendered. Cousineau v. Laramee, 388 Mass. 859, 863 n. 4 (1983).
Rule 3(c) of the Uniform Small Claims Rules states that a defendant's counterclaims shall not be compulsory. The Appeals Court has held that where a small claims defendant loses in an action seeking collection for services rendered he will not be barred from bringing a later action against the service provider on 93A grounds. Smith v. Caggiano, 12 Mass. App. Ct. 41, 46 (1981). This decision was based in large part on the non-compulsory nature of counterclaims in small claims court as is provided Rule 3(c).
To ascribe the permissive sense to Rule 3(c) is in conformity with the legislative intent expressed in G.L.c. 218, § 21 which establishes the Small Claims Court. That statute provides that the rulemaking power granted to the court be exercised in such a way as to provide for a simple, informal, and inexpensive procedure for the determination of small claims. Small claims procedures should not require the layman to have an understanding of the legal technicalities and requirements that exist regarding compulsory counterclaims in ordinary civil actions.
The limited scope of procedure in the Small Claims Court warrants a new determination of negligence in the District Court where the procedures are far more extensive. This is consistent with the result offered by the RESTATEMENT OF JUDGMENTS (1982). The RESTATEMENT, section 28, provides an illustration in which A brings an action for property damage in a small claims court and prevails on the basis of a finding of B's negligence. In a subsequent action by B against A the finding of B's negligence is not conclusive. Id. at 280, illustration no. 7.
Even if the case before us had been a regular civil action, Dist./Mun. Cts. R. Civ. P., Rule 13(a) (3) would have rendered a similar outcome. Rule 13(a) (3) excludes from compulsory counterclaims any claims "if part or all of the pleader's claim is based upon property damage arising out of a collision, personal injury, including actions for consequential damages or death." Donovan's present claim falls within this rule.
Rule 13(a) (3) was included as an exception to the compulsory counterclaim rule because of the potential for conflict of interest where an assured party is represented by his insurance carrier's attorney in the first action. If the same lawyer were charged with protecting both the interests of the insurance carrier in defending a claim and the interests of the assured in asserting a claim, problems of conflict of interest would naturally arise. See Reporter's Notes, Mass. Ann. Laws, Civil Rule 13 (Law. Co-op. 1982). See also Parrell v. Kenan, 389 Mass. 809, 815 n. 7 (1983).
Strict res judicata principles could preclude an insured motorist from bringing a law suit after an insurance carrier had disposed of a case against him in such a way as may appear to the insurance carrier to be in the best interests of the insurance carrier but which may not be in the best interests of the insured motorist. The insurance carrier is not bound "to consult the interest of the insured to the prejudice of its own interest in the case of a conflict between the two." Long v. Union Indemnity Co., 277 Mass. 428, 430 (1931).
Rule 13 of the Mass. Civ. P. Rules, effective July 1, 1974, changes the normal result of res judicata principle. The application of Rule 13 to the principle of res judicata reflects the fact that the real party in interest in defending a motor vehicle accident claim is not usually the named defendant but his insurance carrier. The real party in interest not being the same when a motorist is both defending and prosecuting, res judicata is modified by Rule 13 so that it does not apply.
Again, the RESTATEMENT OF JUDGMENTS offers support to this conclusion. It states in section 22 in relevant part that:
(2) A defendant who may impose a claim as a counterclaim in an action but fails to do so is precluded, after the rendition of judgment in that action, from maintaining an action on the claim if:
(a) The counterclaim is required to be imposed by a compulsory counterclaim or rule of court, or
(b) The relationship between the counterclaim and the plaintiff's claim is such that successful prosecution of the second action would nullify the initial judgment or would impair rights established in the initial action.
Of particular note is the illustration which follows the above restatement:
1. A brings an action against B for the negligent driving of an automobile by B resulting in a collision with an automobile driven by A. B fails to plead and judgment by default is given against him. B is not precluded from subsequently maintaining an action against A for his own injuries on the grounds that those injuries were the result of A's negligence. Id.
While it is desirable that all claims be included in the same action, policy decisions have been made in adopting court rules which weigh that desirable goal against the danger of conflicts of interest of attorneys representing insurance companies and the desirability of simple, informal procedures in the Small Claims Court. Rule 3(c) of the Small Claims Rules of Dist./Mun. Cts. R. Civ. P., Rule 13(a) (3) are the result of policy decisions.
Plaintiff Donovan's claim not being subject to issue preclusion by application of res judicata, the trial court's allowance of summary judgment should be vacated and an order remanding this case for trial should be entered.