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Action for damages. Chatham Superior Court. Before Judge Harrison.
Since the claim in the third-party complaint arose out of the transaction or occurrence that was the subject matter of a former action for declaratory judgment, it was a compulsory counterclaim in the former action and thus was subject to dismissal in the present case.
Robert H. Lipe filed a suit in the Chatham Superior Court against Jon W. Myers. The complaint alleged that: "Defendant wantonly, negligently and with utter disregard for plaintiff's safety drove a motor vehicle against plaintiff who was in and upon said highway in full view of defendant." Subsequently, United Services Automobile Association (hereinafter referred to as United Services) filed a suit for declaratory judgment against the plaintiff and the defendant in the same court where the original action was pending. This complaint alleged that United Services had issued an automobile liability policy to Myers and the defense of the suit brought by Lipe against Myers had been referred to United Services. It was further alleged that the insurance policy contained an exclusion that it would not apply to bodily injury caused intentionally by or at the direction of the insured; that, upon information and belief, Myers intentionally and wilfully drove his automobile into Lipe and that such wilful and intentional tort was not covered under the terms of the policy. United Services sought declaratory relief because it was uncertain as to its liability under the terms of the policy and asked for a judgment declaring the rights and liabilities of it with respect to the contract of insurance issued to Myers.
Myers served his defense to the complaint for declaratory judgment and moved to dismiss the complaint upon the grounds that it failed to state a claim upon which relief could be granted. His answer alleged in Paragraph 10 that the only controversy was "that the plaintiff insurance company, without just cause, is denying the defendant, Jon W. Myers, the protection to which he is entitled under the above policy of insurance with plaintiff insurance company, including defense to the action brought against him by the defendant, Robert H. Lipe, which has required the defendant Jon W. Myers, to retain the services of his own attorney to file such defenses and to also defend the within separate suit brought against him by his own insurance company, the plaintiff herein." Myers prayed that he "have judgment in his favor against the plaintiff to include a declaration that the plaintiff is bound to afford the defendant Jon W. Myers all of the protection set forth in the aforesaid insurance policy; that the defendant Jon W. Myers have judgment against the plaintiff for reasonable attorney's fees and costs; and that the defendant Jon W. Myers have such further legal and equitable relief as this Honorable Court may deem proper."
According to January 21, 1970, order of the Superior Court which abated the trial of Lipe v. Myers pending trial of the suit for declaratory judgment, "simultaneously" with the filing of the answer in the declaratory judgment action Myers filed his answer to Lipe's suit and a third party complaint against United Services. The third party complaint was in two counts: the first alleged liability over to defendant Myers for any judgment obtained against him by Lipe, and in addition, sought general damages in the sum of $10,000 by reason of said company being stubborn and litigious, and 33-1/3% of any recovery for general damages as attorney fees, with an additional penalty of 25% as provided by law; the second count sought punitive damages.
Myers moved for a judgment on the pleadings in the declaratory judgment action contending that the suit for declaratory judgment failed to state a claim against defendant upon which relief could be granted. This motion was overruled by the trial judge on May 5, 1969.
The declaratory judgment case was submitted to a jury and the jury returned a verdict finding the injury sustained by Lipe was not caused intentionally by Myers. Judgment was entered upon this verdict on February 17, 1970, declaring the rights and liabilities of the parties and the suit brought by Lipe against Myers was dismissed with prejudice the next day, February 18, 1970, the suit having been settled by United Services on behalf of its named insured, Myers. Following dismissal of the main case, United Services moved to dismiss the third party complaint and this motion was sustained. Appeal was then taken to this court.
Section 13 of the Civil Practice Act (Code Ann. 81A-113 (a); Ga. L. 1966, pp. 609, 625) recites: "A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject-matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. But the pleader need not state the claim if (1) at the time the action was commenced the claim was the subject of another pending action." Under this section a party may not "decline to litigate" in the original action and seek to bring a separate suit. Best v. Ga. Power Co., 224 Ga. 669 (164 SE2d 125).
In 3 Moore's Federal Practice 13-333, 13.14 [2], it is pointed out that in 1946 the Federal Rules were changed to make it clear that the exception applies only if at the time the action was commenced the claim was the subject of a pending action. "The possibility of a contrary construction was regarded as undesirable since it would permit a party having a claim which would be the subject of a compulsory counterclaim to avoid stating it as such by bringing an independent action in another court after the commencement of the federal action but before serving his pleading in the original federal action." Id. It is clear in this case that at the time the declaratory judgment action was commenced that the third-party complaint was not pending in the other suit. Hence, the exception set forth in Section 13 of the Civil Practice Act is not applicable.
Myers argues that the third party complaint is a separate cause of action from that contained in the declaratory judgment proceedings. However, this is not the determinative factor in deciding whether under Section 13 (a) Myers was required to plead the issues he sought to raise in the third party complaint. The key phrase is that the claim "arises out of the transaction or occurrence that is the subject-matter of the opposing party's claim."
The term "occurrence" or "same transaction" has been given a broad and realistic interpretation by the federal courts. "As the Supreme Court of the United States has said, ' "transaction" is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship.' [Moore v. New York Cotton Exchange, 270 U. S. 593 (46 SC 367, 70 LE 750)]. Thus the test to be applied in determining whether a counterclaim is compulsory is whether there is any logical relationship between the claim advanced by the plaintiff and the claim asserted by the defendant." 2 Kooman, Federal Civil Practice, 158, 13.10. "Any claim that is logically related to another claim that is being sued on is properly the basis for a compulsory counterclaim." 3 Moore's Federal Practice 13-300, 13-302, 13.13. The declaratory judgment action involved interpretation of the insurance contract; Myers' claim rested on that same contract. Here, without question, the claim for attorney fees and bad faith damages arose out of the same occurrence or transaction as the suit for declaratory judgment. That being true, it was incumbent upon Myers to file his compulsory counterclaim to the declaratory judgment action. Upon his failure to do so, and upon conclusion of that suit he was thereafter precluded from attempting to recover the damages he seeks in the third-party complaint.
"A judgment of a court of competent jurisdiction shall be conclusive between the same parties and their privies as to all matters put in issue, or which under the rules of law might have been put in issue in the cause wherein the judgment was rendered, until such judgment shall be reversed or set aside." Code 110-501 Applying Section 13 of the Civil Practice Act and Code 110-501, this court has held that a defendant in a former action had "a duty to litigate each and every issue which existed between the parties touching the subject matter" of a subsequent action in which she was the plaintiff. Leggett v. Gibson-Hart-Durden Funeral Home, 123 Ga. App. 224, 225 (180 SE2d 256).
The trial judge properly dismissed the third-party complaint.
Movant asserts that the opinion overlooks the fact that although the answer to the declaratory judgment action and the third party complaint were filed on the same day that in fact the third party complaint was filed first.
This fact is not controlling. Under Section 13 of the Civil Practice Act and the authority previously cited, Myers must have filed his third party complaint prior to the time the declaratory judgment action was commenced, not prior to the time an answer was filed to the declaratory judgment action. Once the declaratory judgment action began Myers had to counterclaim there and not in another action.
It is also argued that the original suit was pending prior to the declaratory judgment action. However, Section 13 (a) provides that a compulsory counterclaim need not be plead if "at the time the action was commenced the claim was the subject of another pending action." The original suit in no way involved any claim of Myers against United Services. Thus, at the time of the commencement of the declaratory judgment action, this claim was not the subject of a pending action.
Adams, Adams, Brennan & Gardner, Edward T. Brennan, Richard A. Rominger, for appellee.
Joseph B. Bergen, for appellant.
Friday May 22 13:39 EDT

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