## Facts

- Daryl E. Porn, an insured motorist, was injured in a July 17, 1990 automobile accident caused by another driver who ran a stop sign.
- The tortfeasor’s liability coverage was $20,000, which did not cover Porn’s claimed damages.
- Porn sought underinsured motorist benefits from his insurer, National Grange Mutual Insurance Company.
- National Grange refused to pay the underinsured motorist claim; Porn accused the insurer of bad faith in pre-suit communications, including complaints to insurance regulators.
- In November 1993, Porn filed a federal action in the District of Maine for breach of the insurance contract.
- The first action tried issues tied to coverage prerequisites, including the tortfeasor’s negligence and Porn’s contributory negligence; the court entered judgment for Porn after a jury found $400,000 in damages, resulting in a net award of $255,314.40 under policy limits and set-offs.
- About six months later, Porn filed a second federal action based on the same claim handling and refusal to pay, asserting breach of the covenant of good faith and fair dealing, intentional and negligent infliction of emotional distress, and consumer-protection statutory claims.
- The district court granted summary judgment for National Grange in the second action on claim preclusion and, as to at least one theory, issue preclusion.

## Issues

1. Whether Porn’s second action was barred by claim preclusion because it arose from the same transaction as the earlier breach-of-contract action and could have been brought in that first suit.
2. Whether issue preclusion independently barred relitigation of an issue decided in the first action that was necessary to the judgment.
3. Whether an equitable hardship exception justified allowing the second action despite ordinary preclusion rules.

## Decision

- The First Circuit affirmed summary judgment for National Grange.
- The court held that claim preclusion barred the entire second action because the first action ended in a final judgment on the merits, involved the same parties, and the later claims arose from the same transaction or common nucleus of operative facts.
- The court further held that issue preclusion provided additional support as to at least one aspect of the second action.
- The court rejected Porn’s request for an equitable exception, finding no unusual hardship and noting he had an adequate opportunity to bring all related theories in the first suit.

## Legal Principles

- Claim preclusion bars a later suit when there is (1) a final judgment on the merits, (2) sufficient identity between the causes of action (measured by a common nucleus of operative facts), and (3) sufficient identity between the parties.
- Claim preclusion reaches not only claims actually litigated, but also claims that could have been litigated in the earlier action arising from the same transaction.
- A plaintiff may not split a single dispute into successive lawsuits by changing legal theories (e.g., contract first, then bad-faith tort and statutory claims) when the factual basis is the same refusal to pay and related claim handling.
- Issue preclusion bars relitigation of an issue actually litigated and determined by a valid and final judgment where the determination was essential to that judgment.
- Courts generally will not create fairness-based exceptions to preclusion where the party had a full and fair opportunity to raise all related claims in the first action.

## Conclusion

The First Circuit held that an insured who first litigated a contract claim to judgment could not later sue the same insurer for bad-faith, emotional-distress, and statutory damages arising from the same refusal to pay and related claim handling, because the later theories were required to be brought in the initial action.


Porn v. Nat’l Grange Mut. Ins. Co., 93 F.3d 31 (1st Cir. 1996)