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Soo Line Railroad Co. v. Brown's Crew Car of Wyoming3/11/2003
however, that if the issue were that of Brown's assumption of the railroad's tort liability, "the Court may very well find that the CTS/Brown Contract was an 'insured contract' under the Policy's terms." Id.
In its complaint in this declaratory-judgment action, the Soo Line alleged that Brown's was required to indemnify the railroad for the injured employees' claims, which were tort claims. Holding that Brown's indemnity agreement was an "insured contract," the Minnesota district court in its summary-judgment order stated: "It is an agreement by Brown's Crew Car to 'assume the tort liability'" of the Soo Line for bodily-injury claims.
Collateral estoppel applies when four factors are present:
1. The issue is identical to the issue in a prior adjudication.
2. There was a final judgment on the merits.
3. The estopped party was a party in the prior action or. was in privity with such a party; and
4. The estopped party was given a full and fair opportunity to be heard on the adjudicated issue. Nelson v. Am. Family Ins. Group, 651 N.W.2d 499, 511 (Minn. 2002).
The only question now is whether the issues regarding the insured contract were identical in both actions. The federal court drew a distinction between a contractual obligation to pay defense costs and an agreement to assume another's tort liability, and ruled that the former was not, but the latter would likely be, an insured contract. Progressive Cas. Ins. Co., 27 F. Supp.2d at 1293. The Minnesota district court seemed to focus its decision on Brown's agreement to assume the Soo Line's tort liability.
Although the issues are similar and arise out of the same indemnity contract, the respective courts' legal perspectives were different. We cannot conclude from the record that the courts were deciding identical issues, and we are guided by the supreme court's pronouncement about applying collateral estoppel to bar litigation:
Courts do not apply collateral estoppel rigidly and focus instead on whether an injustice would be worked upon the party upon whom the estoppel is urged. Nelson, 651 N.W.2d at 511.
Other Minnesota courts have addressed the "identical issue" element of collateral estoppel. In Am. Hoist & Derrick Co. v. Employers' of Wausau, this court was asked to interpret the coverage of American Hoist's insurance policy with Employers' of Wausau. Am. Hoist & Derrick Co. v. Employers' of Wausau, 454 N.W.2d 462, 464-65 (Minn. App. 1990), review denied (Minn. June 26, 1990). Employers' of Wausau argued that American Hoist was not covered by the policy; American Hoist argued that Employers' of Wausau was collaterally estopped from arguing this issue because Employers' of Wausau had already litigated the meaning of this specific provision in a Kentucky litigation. Id. at 468. This court held that Employers' of Wausau was not collaterally estopped from arguing this specific policy-coverage provision because the policy in the Kentucky case contained the language "the amount available" while this case's provision stated "the amount afforded" and that these different words create different issues. Id. Thus, collateral estoppel did not apply.
In Haavisto v. Perpich, the supreme court found that collateral estoppel did not apply because different issues were raised. Haavisto v. Perpich, 520 N.W.2d 727, 732 (Minn. 1994). In Haavisto, a prisoner had claimed that a seven-month delay in diagnosing his tuberculosis constituted cruel and unusual punishment. In a previous federal class-action suit involving the prisoner, the class of prisoners claimed that the prison's negligent response to a tuberculosis outbreak in the
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