GARY W. CRUICKSHANK, trustee, 
Heard: November 6, 2018.
Estoppel. Judgment, Preclusive effect. Practice, Civil,
action commenced in the Superior Court Department on
September 19, 2014.
case was heard by Heidi E. Brieger, J., on a motion for
M. Burke for the plaintiff.
J. Cox for the defendant.
Present: Green, C.J., Meade, & Sacks, JJ.
appeal considers the question of when the determination of a
factual issue in prior litigation may have preclusive effect
against a different party in subsequent litigation.
Specifically, we first consider whether, under the theory of
"virtual representation," the trustee for a
bankrupt tortfeasor stands in privity with the victim of an
automobile accident who previously pursued, and lost, a claim
against the tortfeasor's insurer based on alleged unfair
settlement practices. We then consider whether the relevant
equities are such that the prior adjudication has preclusive
effect against the trustee's claim that the same unfair
settlement practices constituted a breach of the
insurer's contractual obligations under its insurance
policy with the tortfeasor. We conclude that the trustee is
in privity with the accident victim in the circumstances of
the present case, and that the balance of equities favors
preclusion. We accordingly affirm the judgment of the
Superior Court dismissing the trustee's claim.
Valerie Troiano struck and injured Elsa Villanueva with her
automobile, Villanueva brought an action against Troiano for
negligence. A Superior Court jury found Troiano sixty-five
per cent negligent and Villanueva thirty-five per cent
negligent for the accident, and judgment entered for
Villanueva in the amount of $414, 500 after the deduction of
$8, 000 in personal injury protection benefits she had
already received. The insurer paid the full policy limit of
$100, 000, and an execution against Troiano entered, in the
amount of $552, 352.37 plus costs. Villanueva thereafter
brought an action against Commerce Insurance Company
(Commerce), from whom Troiano held a liability insurance
policy, claiming that it engaged in unfair insurance
settlement practices, in violation of G. L. c. 176D, when it
initially failed to offer to settle Villanueva's claim
for the $100, 000 policy limit (c. 176D
action). After a jury-waived trial in the
Superior Court, judgment entered for Commerce, rejecting
Villaneuva's assertion that Commerce had engaged in
unfair settlement practices by failing to conduct an adequate
investigation and refusing to make a reasonable offer of
settlement at a time when liability had become reasonably
clear. Villanueva appealed from the judgment, and a panel of
this court affirmed. See Villanueva v.
Commerce Ins. Co., 89 Mass.App.Ct. 1124
(2016). After entry of the Superior Court
judgment in the c. 176D action, but before conclusion of
Villanueva's appeal, Villanueva filed an action for
supplementary process against Troiano (who by then was known
as Valerie Connors). Connors in turn filed a petition for
bankruptcy, and the plaintiff trustee was appointed.
Thereafter, by motion dated August 4, 2014, the trustee
sought permission to employ special counsel, to be
compensated pursuant to a contingent fee agreement, in order
to pursue the claim against Commerce. The special counsel
(the same attorney who had represented Villanueva in her
unsuccessful claim against Commerce) then filed the present
action against Commerce, alleging breach of contract by
reason of its initial failure to offer to settle
Villanueva's claim for the policy limit. See note 3,
supra. A judge of the Superior Court allowed the
defendant's motion for summary judgment, and this appeal
preclusion' . . . prevents relitigation of an issue
determined in an earlier action where the same issue arises
in a later action, based on a different claim, between the
same parties or their privies." Heacock
v. Heacock, 402 Mass. 21, 23 n.2 (1988).
See Restatement (Second) of Judgments § 27 (1982). In
order for issue preclusion to bar relitigation of an issue
determined in an earlier adjudication, "a court must
determine that (1) there was a final judgment on the merits
in the prior adjudication; (2) the party against whom
preclusion is asserted was a party (or in privity with a
party) to the prior adjudication; and (3) the issue in the
prior adjudication was identical to the issue in the current
adjudication." Tuper v. North
Adams Ambulance Serv., Inc., 428 Mass. 132, 134 (1998).
In the present case, the prior litigation between Villanueva
and Commerce resulted in a final judgment, and the issue
whether Commerce made a reasonable settlement offer at a time
when its insured's liability had become reasonably clear
was both essential to that judgment and identical to the
central issue of the trustee's claim of contractual
breach in the present action. See note 4, supra. The
trustee nonetheless asserts that issue preclusion does not
bar his claim because he was not the party against whom the
question was adjudicated in the prior litigation, and does
not stand in privity with Villanueva; indeed, he observes,
Connors (the debtor for whose bankruptcy estate he acts as
trustee) is the party against whom Villanueva had previously
obtained and sought to satisfy a substantial damages
preclusive effect to flow from a prior judgment, the party
against whom preclusive effect is asserted must have been
either a party in the prior case or in privity with a party.
See Commissioner of the Dept. of Employment &
Trainingv. Dugan, 428 Mass. 138, 142 (1998)
(issue preclusion, where the party against whom preclusion is
asserted was a party, or in privity with a party, to the
prior adjudication); Gloucester Marine Rys. Corp.
v.Charles Parisi, Inc., 36 Mass.App.Ct.
386, 390 (1994) (claim preclusion, in which there must be
'identity or ...