Direct Auto Insurance Co. v. Bahena

Insurer filed declaratory judgment action, seeking a declaration of no coverage because of policyholder's failure to disclose all household residents over age 15, although her policy named as an additional insured the person driving the vehicle which collided with another vehicle. Court granted summary judgment in that case, at insurer's request. Two weeks later, insurer filed another complaint for declaratory judgment, naming policyholder and driver, and passenger in other vehicle, as defendants, asking for declaration that passenger is not entitled to money and that neither other defendant is entitled to indemnification or defense.Court properly denied insurer's motion to dismiss countercomplaint filed by passenger, and properly entered default judgment against insurer at insurer's request. Passenger, as an injured party, has standing and his suit is not premature. Insurer failed to name that passenger as a necessary party to its prior declaratory judgment action, and cannot now use that failure to foreclose passenger's rights to appeal that determination. As insurer could have litigated its claim in the first action but chose not to, its present claim against passenger is barred by res judicata. Insurer failed in its burden to show that passenger was in privity with the parties int he prior action. (McBRIDE and REYES, concurring.)