Issue preclusion; Herrera v. Wyoming; J.Z.G. Res., Inc. v. Shelby Ins. Co.; Effect of an alternative holding in a related case that the court did not consider on appeal; Restatement (Second) of Judgments § 27, cmt. o.; Jennings v. Stephens

The court reversed the district court, holding that it erred by giving preclusive effect to a prior alternative holding in a related case that the court had not considered. Plaintiff-Pogue, a doctor, submitted claims to his two long-term disability insurance providers, Northwestern Mutual and defendant-Principal Life Insurance Company. However, he neglected to mention that Tennessee had suspended his medical license. Pogue sued both companies, alleging contract breach and other claims. The district court granted summary judgment for Northwestern in Pogue I, ruling that (1) Pogue was suspended before he became disabled or, in the alternative, (2) his suspension contributed to his disability (a severe anxiety disorder). The court in Pogue I affirmed on the first ground, and did not consider the second. In this case against Principal, the district court applied issue preclusion in granting Principal summary judgment based on the district court’s alternative ruling in Pogue I—"that the suspension of Pogue’s license contributed to his disability.” Pogue appealed, arguing that “the district court erred by giving preclusive effect to an alternative holding on which this court declined to opine.” The court agreed. It relied on the Restatement’s position that “‘once an appellate court has affirmed on one ground and passed over another, preclusion does not attach to the ground omitted from its decision.’” Thus, the issue not considered in Pogue I—whether his suspension contributed to his anxiety disorder—could not be given preclusive effect. Reversed and remanded.