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COLLATERAL ESTOPPEL - BUSINESS RELATIONSHIPS
1999 National Legal Research Group, Inc.

MISSOURI: Besand v. Gibbar, 982 S.W.2d 808 (Mo. Ct. App. 1998).

The husband was not collaterally estopped after the parties' dissolution proceedings from bringing an action against a business entity in which the former wife had been awarded an interest.


In the parties' marriage dissolution proceedings, the wife was awarded one-half of the husband's interest in two businesses namely, "[o]ne-half of [the husband's] interest in H&G Marine Services, Inc., a Missouri corporation, and GOB Sales and Service, a partnership." The husband did not appeal the dissolution decree.

The husband subsequently sued the wife, H&G, and a third party, alleging that H&G was a shell corporation and served merely as a conduit for carrying out an oral partnership agreement between the husband and the third party. The defendants filed a motion for summary judgment on the theory that the husband was collaterally estopped from litigating the business relationship because the dissolution court already determined that H&G was a corporation. The trial court granted the summary judgment motion.

The Missouri Court of Appeals reversed, holding that the elements of collateral estoppel were not satisfied here so as to bar the husband from litigating his claim.

General Principles. Collateral estoppel precludes litigation of an issue that has already been decided in a previous action, the court observed. Defensive collateral estoppel is used by a defendant to keep a plaintiff from asserting a claim that the plaintiff previously litigated and lost against another defendant, the court added.

Collateral estoppel does not reach issues which might have been litigated, but only those which were necessarily and unambiguously decided, the court continued. Furthermore, collateral estoppel does not apply when a general judgment leaves it unclear which issues were decided.

Four factors must be considered, the court said, when determining whether collateral estoppel is appropriate: (1) whether the issue decided in the prior adjudication was identical to the issue presented in the present action; (2) whether the prior adjudication resulted in a judgment on the merits; (3) whether the party against whom collateral estoppel is asserted was a party or in privity with a party to the prior adjudication; and (4) whether the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior suit.

Elements Were Not Met Here. There was no dispute here about the second and third elements of collateral estoppel, the court noted. The prior adjudication the dissolution action resulted in a judgment on the merits, and the husband was a party to that action, the court explained.

The court found, however, that the first element of collateral estoppel was not satisfied. The issue of division of property was different from the issue of the business relationship between the husband, H&G, and the third party, the court observed. The issue in the dissolution action was the nature and extent of the ownership interest of the husband and the wife in H&G, whereas the present lawsuit involved the business relationship between the husband and the third party and whether H&G was merely a shell corporation. The husband would not have to prove in the present action any issue which was essential to the determination of the prior action, the court noted.

The court also found that the fourth element of collateral estoppel was not satisfied in that the husband did not have a full and fair opportunity to litigate the issue of the business relationship in the dissolution proceeding. The third party and H&G were not parties to the dissolution proceeding, and the question of the husband's business relationship with them was not litigated in the dissolution action, the court noted.

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