               IN THE SUPREME COURT OF IOWA
                               No. 18–2183

                           Filed March 20, 2020


LEMARTEC ENGINEERING & CONSTRUCTION n/k/a LEMARTEC
CORPORATION,

      Appellant,

vs.

ADVANCE CONVEYING TECHNOLOGIES, LLC,

      Appellee.


      Appeal from the Iowa District Court for Monroe County, John

Telleen, Judge.



      On interlocutory appeal of a district court order granting summary

judgment in appellee’s favor, appellant argues appellee is not entitled to

claim preclusion or issue preclusion even though the federal court found

in appellee’s favor in the parallel federal case.      REVERSED AND

REMANDED WITH DIRECTIONS.


      Erik W. Scharf, Miami, Florida, Mark L. Tripp, Andrew C. Johnson,

Thomas M. Boes, and Robert J. Thole of Bradshaw, Fowler, Proctor &

Fairgrave, P.C., Des Moines, and Jason L. Molder, Miami Florida, for

appellant.



      Kevin J. Caster and Dana L. Oxley (until withdrawal) of Shuttleworth

& Ingersoll, P.L.C., Cedar Rapids, for appellee.
                                              2

APPEL, Justice.

      In this construction law case, we consider the applicability of the

doctrines of claim and issue preclusion to disputes arising out of a contract

between two subcontractors in a construction project.

      First, a dispute arose around the fabrication and operation of a salt

conveyor system. In federal litigation, a number of subcontracting parties

litigated questions related to the fabrication of the salt conveyor system

prior to litigation.   The federal controversy was eventually reduced to

judgment.

      The   owner      of    the   facility       filed   a   second   lawsuit   against

subcontractors involved in the federal litigation in state court. The owner

claimed in the state court litigation that after installation, the salt conveyor

system developed corrosion issues in breach of contract and express and

implied warranties.         The parties filed various cross-claims, with one

contractor seeking indemnity from the fabricator of the salt conveyor

system.

      After the federal litigation was resolved, a successful subcontractor

in the federal litigation brought a motion for summary judgment in the

state court action, arguing that determinations in the federal litigation

precluded parties from litigating issues related to the salt conveyor system

in state court.

      The district court granted summary judgment to the successful

federal subcontractor on claim and issue preclusion grounds.                          A

disappointed party sought interlocutory appeal, claiming, among other

things, that the successful party in the federal litigation waived its claim

preclusion argument in the state court litigation because it failed to give

notice of intent to pursue claim preclusion in the simultaneously pending

state court litigation.        On the question of issue preclusion, the
                                      3

disappointed party asserted that it had no reasonable opportunity in

federal court to litigate its indemnity claim related to the alleged corrosion

problems that arose after the salt conveyor equipment was installed and,

therefore, issue preclusion did not apply.

      We granted the application for interlocutory review. For the reasons

expressed below, we conclude that the district court erred in granting

summary judgment based on claim and issue preclusion under the facts

of this case.

      I. Factual and Procedural Background.

      A. Relationship of the Parties.        In 2013, HF Chlor-Alkali, LLC

(HFCA) entered into a written agreement with Conve & AVS, Inc. (Conve)

to construct a chlor-alkali manufacturing facility (the Project) in Eddyville,

Iowa. Conve in turn entered into a subcontract with Lemartec Engineering

& Construction n/k/a Lemartec Corporation (Lemartec) to design and

build the physical plant for the Project which included a salt conveyor

system (conveyor system).

      Lemartec subcontracted part of the work on the conveyor system to

two other entities. Lemartec, through a purchase order, hired Advance

Conveying Technologies, LLC (ACT) for the design and manufacture of the

conveyor system.      Later, Lemartec entered into a subcontract with

Southland Process Group, LLC (SPG) for the installation and erection of

the conveyor system at the Project location.

      The conveyor system aspect of the Project did not proceed smoothly.

SPG claimed that there were problems with the component parts supplied

by ACT. Lemartec contacted ACT, claiming deficiencies in ACT’s work.

SPG eventually finished the work but claimed that it incurred significant

additional costs and that Lemartec and ACT were responsible for them.
                                     4

      B. Filing of Federal Court and State Court Litigation.

      1. Overview of federal court litigation. The first litigation arrow in

this case was fired by SPG on October 16, 2015, in the United States

District Court for the Southern District of Iowa. SPG sought to recover its

additional expenses related to the assembly of the conveyor system from

Lemartec and ACT.      Lemartec and SPG settled outstanding disputes

between them, leaving ACT’s claim that Lemartec improperly withheld

from ATC the balance owed under the purchase order to be litigated.

      2. Overview of state court litigation.   The completed Project was

turned over to Conve in June 2015 and later to owner HFCA. HFCA was

dissatisfied with many aspects of the Project. As a result, HFCA launched

the second litigation arrow in this case in state court, naming a number of

defendants including Conve. HFCA alleged, among other things, that the

conveyor system was installed, turned over and put to use, and failed to

perform to specifications.   Conve, in turn brought a third-party claim

against Lemartec for indemnification and contribution.        Lemartec on

June 5, 2017, brought a third-party claim against ACT.

      ACT filed an answer to Lemartec’s third-party claim. In its answer,

ACT did not make reference to the pending federal litigation and did not

raise a res judicata affirmative defense.

      Discovery proceeded in the state court litigation. On June 14, 2018,

HFCA served interrogatory responses on the parties. According to the

responses, HFCA claimed that the conveyor system failed to perform in

that the conveyor components and electrical system corroded; the

conveyor belt did not pass approval testing; the bucket system leaked,

corroded, and fell apart; and the equipment ruptured due to the failure to

prevent vibrations.
                                      5

      3. Federal court judgment. The federal court held a bench trial in

the federal litigation in April 2018. The federal court characterized the

issue to be tried as “whether either of the two remaining parties [Lemartec

and/or ACT] owes money to the other for money earned, but unpaid;

project delays; and for additional work that was required to make the

conveyor system functional.”

      On May 21, 2018, the federal district court entered its ruling in favor

of ACT. The federal district court awarded ACT $317,467.07 plus interest.

Lemartec has appealed the case to the United States Court of Appeals for

the Eighth Circuit.

      4. Summary judgment in state court proceedings based on preclusive

effect of federal judgment. On August 15, 2018, ACT filed a motion for

summary judgment in the state court proceedings. In its moving papers,

ACT claimed that the judgment in the federal litigation compelled

judgment in its favor in the state court litigation. Lemartec responded, in

part, that res judicata is an affirmative defense that must be raised in an

answer and that ACT had failed to do so. In response, on October 31,

2018, ACT filed a motion to amend its answer to include a res judicata

affirmative defense. Lemartec opposed the motion.

      The district court granted ACT’s motion for summary judgment. The

district court rejected Lemartec’s argument that ACT waived its right to

assert preclusion where litigation is simultaneous by failing to provide

Lemartec with notice. On the question of claim preclusion, the district

court found that the claims in the federal and state actions were similar

because they are “premised on the contractual relationship between

Lemartec and ACT.”       Turning to issue preclusion, the district court

reasoned that “the issue of indemnity rights arising under the Purchase

Order has been raised and litigated in the prior federal action.” As a result,
                                     6

the district court granted summary judgment on both claim preclusion

and issue preclusion. Lemartec appealed. We retained the case for our

consideration.

      III. Claim Preclusion.

      A. Introduction. This case involves the related concepts of claim

preclusion and issue preclusion.

      1. Claim preclusion. Claim preclusion is “based on the principle

that a party may not split or try his claim piecemeal . . . . A party must

litigate all matters growing out of his claim at one time and not in separate

actions.” Iowa Coal Mining Co. v. Monroe County, 555 N.W.2d 418, 441

(Iowa 1996) (quoting B & B Asphalt Co. v. T.S. McShane Co., 242 N.W.2d

279, 286 (Iowa 1976)). “Once an issue has been resolved, there is no

further fact-finding function to be performed.” Colvin v. Story Cty. Bd. of

Review, 653 N.W.2d 345, 349 (Iowa 2002).

      2. Issue preclusion.     Issue preclusion prevents a party “from

relitigating in a subsequent action issues raised and resolved in [a]

previous action.” Soults Farms, Inc. v. Shafer, 797 N.W.2d 92, 103 (Iowa

1981). “[W]here a particular issue or fact is litigated and decided, the

judgment estops both parties from later litigating the same issue.” Grant

v. Iowa Dep’t of Human Servs., 722 N.W.2d 169, 174 (Iowa 2006). Issue

preclusion applies to both factual and legal issues raised and resolved in

a previous action. See Barker v. Iowa Dep’t of Pub. Safety, 922 N.W.2d

581, 587 (Iowa 2019).

      The doctrine “serves a dual purpose: to protect litigants from ‘the

vexation of relitigating identical issues with identical parties’ ” and to

further “the interest of judicial economy and efficiency by preventing

unnecessary litigation.” Winnebago Indus. v. Haverly, 727 N.W.2d 567,

571–72 (Iowa 2006) (quoting Am. Family Mut. Ins. v. Allied Mut. Ins., 562
                                      7

N.W.2d 159, 163 (Iowa 1997)). Issue preclusion “prevent[s] the anomalous

situation, so damaging to public faith in the judicial system, of two

authoritative but conflicting answers being given to the very same

question.” Emp’rs Mut. Cas. v. Van Haaften, 815 N.W.2d 17, 22 (Iowa

2012) (quoting Grant, 722 N.W.2d at 178).

      In order to successfully invoke issue preclusion,

      (1) the issue in the present case must be identical, (2) the issue
      must have been raised and litigated in the prior action, (3) the
      issue must have been material and relevant to the disposition
      of the prior case, and (4) the determination of the issue in the
      prior action must have been essential to the resulting
      judgment.

Fischer v. City of Sioux City, 654 N.W.2d 544, 547 (Iowa 2002).

      B. Position of Lemartec.

      1. Waiver of claim preclusion. Lemartec claims that ACT waived its

right to assert claim preclusion in the state litigation.       According to

Lemartec, when two cases are pending simultaneously, a litigant must

invoke claim-splitting remedies in the litigation or waive any claim-

splitting relief. In support of its waiver theory, Lemartec cites section 26,

comment a of the Restatement (Second) of Judgments, which provides,

             Where the plaintiff is simultaneously maintaining
      separate actions based upon parts of the same claim, and in
      neither action does the defendant make the objection that
      another action is pending based on the same claim, judgment
      in one of the actions does not preclude the plaintiff from
      proceeding and obtaining judgment in the other action. The
      failure of the defendant to object to the splitting of the
      plaintiff’s claim is effective as an acquiescence in the splitting
      of the claim.

Restatement (Second) of Judgments § 26 cmt. a, at 235 (Am. Law Inst.

1982) [hereinafter Restatement (Second)]. Lemartec asserts that this court

adopted the approach of the comment in Pagel v. Notbohm, 186 N.W.2d

638 (Iowa 1971), and Noel v. Noel, 334 N.W.2d 146 (Iowa 1983). In Pagel,
                                      8

the defendant filed answers in two simultaneous actions without taking

any steps to consolidate or object to claim splitting. 186 N.W.2d at 639.

In Noel, a son brought a district court action against his father seeking to

recoup improvements to a leasehold, and, after his father’s death, brought

a claim in probate related to the same subject matter. 334 N.W.2d at 147.

The executor answered in both actions but did not note the pendency of

the other action or ask for consolidation of the cases. Id. After judgment

was entered in the district court action, the executor sought to preclude

the probate litigation. Id. The Noel court rejected claim preclusion, noting

that “decisions dealing with this situation hold that a party waives claim

preclusion by failing to interpose it prior to judgment in the first case.” Id.

at 149.

      Lemartec recognized that the district court allowed ACT to amend

its pleading to assert res judicata arising from the federal judgment after

ACT filed its motion for summary judgment in this case. Lemartec asserts

that res judicata is an affirmative defense “to be asserted by answer and

cannot be raised by a motion to dismiss.” Bertran v. Glens Falls Ins., 232

N.W.2d 527, 532 (Iowa 1975) (quoting Bickford v. Am. Interinsurance Exch.,

222 N.W.2d 450, 454 (Iowa 1974)). Lemartec asserts that by waiting until

a judgment was entered in the federal litigation, ACT foreclosed Lemartec’s

ability to weigh its options in the federal litigation to ensure its indemnity

claims were not preempted. Clements v. Airport Auth., 69 F.3d 321, 329

(9th Cir. 1995). Lemartec urges that the burden is on the defendant to

give timely notice of an objection to claim splitting where simultaneous

litigation is pending. Brown v. Lockwood, 432 N.Y.S.2d 186, 199 (App.

Div. 1980).

      2. Claims arising after filing of first complaint. Lemartec asserts that

claims in the state court litigation arose after the filing of the complaint in
                                             9

the federal law suit. Based on this factual premise, Lemartec claims Iowa

should adopt a bright-line rule that when claims arise after the filing of

the first complaint, the doctrine of claim preclusion should not apply.

Lemartec contends that the approach that claim preclusion does not apply

to foreclose litigation in another forum when the claims arise after the filing

of the first action has been adopted by courts in California, Minnesota,

and at least seven federal circuits. 1 Lemartec recognizes that Iowa has not

yet adopted the rule but argues that it is consistent with Iowa law and

should be adopted now.

       In seeking to apply the after-filing, bright-line rule, Lemartec

emphasizes that it seeks to enforce indemnity claims in the state and

federal litigation. Lemartec observes that indemnity claims do not accrue

until the indemnitee’s liability is fixed.           Lemartec points out that the

federal litigation claim dealt with SPG’s claim that the performance of

Lemartec and ACT delayed SPG’s work and increased its expenses in

installing the conveyor system. In contrast, in the state court litigation,

HFCA asserted that, as installed, postcompletion, the conveyor system was

defective. The federal court claims and the state court claims, according

to Lemartec, did not arise at the same time. See Minch Family LLLP v.

Buffalo-Red River Watershed Dist., 628 F.3d 960, 966–67 (8th Cir. 2010).

       3. Claims materially distinguishable. Lemartec contends that ACT

cannot assert claim preclusion because the claims in the federal and state

litigation are materially distinguishable. Lemartec reprises its refrain: the

        1See Howard v. City of Coos Bay, 871 F.3d 1032, 1040 (9th Cir. 2017) (stating

California rule); Bank of N.Y. v. First Millennium, Inc., 607 F.3d 905, 919 (2d Cir. 2010);
Smith v. Potter, 513 F.3d 781, 783 (7th Cir. 2008); Rawe v. Liberty Mut. Fire Ins., 462 F.3d
521, 529–30 (6th Cir. 2006); Mitchell v. City of Moore, 218 F.3d 1190, 1202 (10th Cir.
2000); Manning v. City of Auburn, 953 F.2d 1355, 1360 (11th Cir. 1992); Mach v. Wells
Concrete Prods. Co., 866 N.W.2d 921, 925 (Minn. 2015); cf. Young-Henderson v.
Spartanburg Area Mental Health Ctr., 945 F.2d 770, 774 (4th Cir. 1991) (allowing for the
possibility of claims that could not be raised at the time of initial filing).
                                      10

federal suit involved a claim for indemnity based on SPG’s precompletion

allegations, while the state court litigation involves a claim for indemnity

based upon HFCA’s and Conve’s postcompletion allegations.

      Lemartec argues that a comparison of the federal district court’s

ruling and the pleadings in the state court litigation proves the point. In

its ruling, the federal district court noted that “[o]ther parties, and in large

part Lemartec itself, caused the delays that Lemartec failed to prove were

caused by ACT.” Further, the federal district court observed that “the

evidence is that ACT delivered product within a reasonable amount of time

from Lemartec’s implementation of the fast-track delivery system.”           In

contrast, Lemartec argues the state court litigation focuses on HFCA’s

allegations that the conveyor system, as installed, failed to meet

expectations.

      Lemartec cites Iowa Coal Mining Co. for the general proposition that

“if . . . the two actions rest upon different states of facts, or if different

proofs would be required to sustain the two actions, a judgment in one is

no bar to the maintenance of the other.” 555 N.W.2d at 441 (quoting

Phoenix Fin. Corp. v. Iowa-Wis. Bridge Co., 237 Iowa 165, 176, 20 N.W.2d

457, 462 (1945)). Lemartec notes, but does not address, potential contrary

authority in Villarreal v. United Fire & Casualty Co., 873 N.W.2d 714, 729

(2016).

      Finally, Lemartec challenges the assertion of the state district court

that “Lemartec cannot maintain an action on its contractual rights under

the Purchase Order after previously bringing suit on an alleged breach of

the same agreement.”       Lemartec argues that the state district court

overlooked the distinction between a “total breach” of contract, where the

plaintiff sues for the entire value of the contract based on total breach, and

a partial breach, where there can be multiple breaches of contract. In
                                     11

support of its argument, Lemartec cites section 26, comment g of the

Restatement (Second) of Judgments, which states,

      A judgment in an action for breach of contract does not
      normally preclude the plaintiff from thereafter maintaining an
      action for breaches of the same contract that consist of failure
      to render performance due after commencement of the first
      action.

Restatement (Second) §26 cmt. g, at 240. Thus, according to Lemartec,

the fact that the claims in the federal court and the state court litigations

both relate to the same purchase order is not dispositive if separate issues

are raised.

      C. Position of ACT.

      1. Transactional approach.      Whether to apply claim preclusion

turns, in part, on the definition of a “claim.” ACT asserts that we have

applied “the transactional approach of the Restatement.”         Under the

Restatement (Second) of Judgments, “the claim extinguished includes all

rights of the plaintiff to remedies against the defendant with respect to all

or any part of the transaction, or series of connected transactions, out of

which the action arose.” Restatement (Second) § 24, at 196. As seen from

the above passage, the question of claim turns upon the scope of the
“transaction.” ACT notes that Lemartec in its pleading in both cases, pled,

nearly verbatim, breach of contract, breach of implied warranty of

workmanlike construction, breach of implied warranty of fitness for a

particular purpose, and breach of express warranty. ACT further claims

that the only transaction in both cases that gives rise to the claims is the

purchase order wherein ACT agreed to “perform and complete all Work

required for the proper execution and completion of all Salt Conveyor

Systems Supply work for the Project.”
                                      12

      In its analysis of the scope of a transaction, ACT recognizes that the

claims of Lemartec are indemnity claims. But, according to ACT, once a

first action seeking indemnification is launched, the party seeking

indemnify must pursue all theories of recovery at that time where there is

no claim that the new theories arose subsequent to resolution of the first

indemnity claim. Arnevik v. Univ. of Minn. Bd. of Regents, 642 N.W.2d 315,

320 (Iowa 2002) (“[O]nce [the employee] started down the path in the first

action seeking indemnification from [her employer], she was required to

bring all theories of recovery at that time.”) Further, because Lemartec

amended its complaint in the federal litigation to include the underlying

claims of breach of contract, breach of warranty, etc., Lemartec was

required to bring all claims arising out of the transaction.

      2. Not “materially different.” ACT next addresses the question of

whether the indemnity claim in the state litigation is “materially different”

from the claims raised and litigated in the federal court litigation. ACT

notes that perfect identity of evidence is not required to assert claim

preclusion. See Villarreal, 873 N.W.2d at 729; Restatement (Second) § 25,

at 209–10. While ACT recognizes that Lemartec relies on a “later events”

theory to avoid preclusion, ACT characterized the “later events” theory as

inapposite because the claims in both cases arise out of the same

obligations owed by ACT.

      Further, ACT asserts that Lemartec in the federal litigation alleged

a significant number of defects. Lemartec claimed in the federal litigation

that the ACT’s deficiencies “included, but were not limited to”

      [d]efective handrail on transfer tower, defective stairs on
      transfer tower, defective hopper rail car unload pit, defective
      rail car uploading pit, defective skirt boards, defective tripper
      car, defective festoon, defective gear box and head pully,
      defective pan feeder rail car pit, defective stops for tripper car,
                                     13
      defective collector chute to bucket elevator, and defective
      catwalk between transfer tower and salt building.

Further, ACT notes that Lemartec asserted, “ACT’s numerous deficiencies

in designing and manufacturing the Salt Conveyer in accordance with the

Project specification drawings shows that ACT failed to follow specific

plans, which supports Lemartec’s implied contractual indemnity claim.”

But, ACT asserts that in the federal litigation it proved that the conveyor

system was 100% operational after it was installed.

      In response to Lemartec’s argument that the case involves multiple
partial breaches under section 26, comment g of the Restatement (Second)

Judgments, ACT asserts that the notion of a partial breach applies only to

a contract involving ongoing obligations such as an employment contract.

ACT argues that in this case, ACT’s performance under the purchase order

was completed by June 2015.

      3. Timing of Lemartec’s claims. ACT addresses Lemartec’s assertion

that the state court litigation claims arose after the claims litigated in

federal court. According to ACT, Lemartec did not limit its defect claims

in the federal litigation to the installation or precompletion period.    In

particular, ACT notes that Lemartec argued, in order to avoid summary

judgment, that “ACT shall Guarantee the work for 18 months after delivery

of Equipment or 12 months after Start-up, whichever is sooner.”           In

response, ACT argues that it put on evidence at the federal trial that the

equipment was fully operational after it was installed. So ACT claims that

in the federal litigation, Lemartec did raise claims related to the operation

of the conveyor system.

      In the alternative, ACT challenges Lemartec’s assertion that the

Lemartec’s state court indemnity claims arose after the indemnity claims

asserted in federal court. ACT notes that while the litigation between ACT
                                     14

and Lemartec began as indemnity and contribution claims, Lemartec

amended its pleadings in both forums in October 2017 to include nearly

identical claims for breach of contract, breach of implied warranties, and

breach of express warranties.      ACT presses its point by noting that

Lemartec’s amended pleading in state court was filed one day prior to its

similar amended pleading in federal court. ACT notes that the conveyor

system was completed in May 2015 and turned over to Conve in June

2015, well before the October 2017 date.

      ACT recognizes that serial breaches of contract may occur. Such

successive contract claims arise, according to ACT, only where the

contracting party fails to render performance due after the beginning of

the first action. Here, according to ACT, it had no performance due after

the delivery of the conveyor system to Conve in June 2015.

      ACT further challenges Lemartec’s effort to rely on the June 2018

date of the discovery responses served by HFCA to support its claim that

the state court claims arose after the filing of the federal litigation.

According to ACT, it is not the date of discovery that matters but instead

the date when the act or event giving rise to the claim occurred.

      4. Rejection of bright-line rule. ACT argues that Iowa courts should

reject Lemartec’s invitation to adopt a bright-line rule that claims arising

after the filing of the first action are not subject to preclusion in later

litigation, at least where application of the rule would be inconsistent with

the transactional approach. In support of its argument, ACT cites Pavone

v. Kirk, 807 N.W.2d 828, 830–31 (Iowa 2011).           In Pavone, a party

successful in a first contract action sought to bring a second contract

action alleging a breach similar to the first that occurred after the first

litigation was commenced. Id. ACT argues Pavone is determinative here.
                                     15

      5. No waiver. ACT argues that it did not waive or acquiesce in claim

splitting. ACT asserts that in Pagel, the father brought part of his claim

for his son’s wrongful death in one action and the other part for his

personal injuries and property in another. Similarly, according to ACT, in

Noel, the son brought part of his claim for a declaration of rights in one

action and the other part for damages in another.

      Here, according to ACT, Lemartec has brought the exact same claim

in both cases. As a result, ACT claims there was no claim splitting under

section 26, comment a of the Restatement (Second) of Judgments, to

which ACT needed to object.

      Further, ACT claims it did, in fact, object to the expansion of claims

by Lemartec through its amendment in the federal litigation. Further, in

the state court action, ACT sought to amend its answer to assert a

res judicata defense early in the litigation. And, according to ACT, the fact

that Lemartec in its settlement with SPG in the federal case included a

release of all claims between SPG and Lemartec in the state court shows

that Lemartec was aware of the relationship between the two cases.

Finally, ACT notes that the waiver exception to claim preclusion does not

apply to issue preclusion. See Noel, 334 N.W.2d at 149–50.

      D. Discussion. On the issue of claim preclusion, we have several

potential arguments to consider.          We conclude, however, that our

approach to simultaneous litigation embraced by section 26, comment a

of the Restatement (Second) of Judgments, and adopted in Noel and Pagel,

is dispositive on the claim preclusion issue.

      Noel and Pagel deal with the narrow question of how to treat

simultaneous claims in different forums that arguably deal with

overlapping disputes. The approach in these cases is a pragmatic one,

based on the notion that in the unusual context of simultaneous litigation
                                     16

involving the same subject matter, the courts and the parties are entitled

to notice and an opportunity to develop a framework for the resolution of

the overlapping issues.

      Here, the federal litigation proceeded to judgment without any

suggestion from ACT that claim preclusion might be involved. The burden

is on ACT to give a timely notice under Noel and Pagel that claim preclusion

might be implicated in light of the simultaneously ending state court

litigation. Clements, 69 F.3d at 329.

      A notice under Noel and Pagel is hardly timely when made after a

judgment has been entered in the first litigation. Indeed, as stated in Noel,

the executor did not raise potential preclusion until a judgment was

obtained in the first action and then tried to interpose the judgment to

preclude the second action.     334 N.W.2d at 148–49.       The Noel court

rejected this approach, noting that “decisions dealing with this situation

hold that a party waives claim preclusion by failing to interpose it prior to

judgment in the first case.” Id. at 149. Further, the Noel court stated that

the executor in that case “waived claim preclusion by failing to interpose

it appropriately before judgment in the declaratory action.” Id.

      Pagel is consistent with the approach in Noel. In Pagel, the court

considered a scenario in which a plaintiff instituted two separate actions

that gave rise to potential claim splitting. The question before the court in

Pagel was whether

      a defendant can lie back without pleading splitting, let his
      opponent proceed to judgment in the first action, and then
      amend his answer in the second action to aver that the
      plaintiff is foreclosed by splitting from prosecuting the second
      action.

186 N.W.2d at 640. The Pagel court noted that “[b]y waiting to interpose

splitting by amendment until after judgment in the first action, defendants
                                      17

placed plaintiff in an inextricable position.” Id. at 641. The Pagel court

found the claim-splitting issue waived. Id.

       As a result, we hold under Noel and Pagel that ACT has waived its

claim-preclusion argument. Because of our resolution of the issue based

upon waiver under Noel and Pagel, we do not reach the other issues related

to claim preclusion raised in this case.

      IV. Issue Preclusion.

      A. Position of Lemartec. Lemartec asserts that the state district

court ruling took too broad an approach to what the “issue” was in the

federal lawsuit. According to Lemartec, the district court in granting ACT’s

motion for summary judgment construed the federal judgment as

precluding categorically any indemnity claims Lemartec might have based

upon the purchase order with ACT.

      Lemartec argues that the federal judgment is fact bound. According

to Lemartec, the issue in the federal litigation was whether Lemartec was

entitled   to   receive   indemnification   for   SPG’s   claims   for   alleged

precompletion delays and deficiencies. In support of its argument, it cites

the federal court ruling stating that the issues remaining for trial were

“whether either of the two remaining parties [Lemartec and/or ACT] owes

money to the other for money earned but unpaid; project delays; and for

additional work that was required to make the conveyor system

functional.”    That, according to Lemartec, is a narrow issue, based on

SPG’s claims, and not a broad categorical question regarding whether

Lemartec is entitled to indemnity from ACT for other alleged wrongs.

      Lemartec notes that in the state court litigation the alleged defects

did not relate to the timing, fabrication, and delivery of the conveyor’s

component parts. Further, there was no suggestion in the federal litigation

that latent or unknown future defects would be foreclosed by a judgment.
                                      18

Lemartec additionally observes that no evidence on the issue of problems

in the operation of the conveyor system was presented in the federal court

litigation, and therefore the question was not “actually litigated” in that

forum. Haverly, 727 N.W.2d at 572.

      Further, Lemartec asserts that indemnification was not raised in the

federal litigation because the right to indemnification does not fully mature

until the indemnitee’s liability is fixed by settlement or judgment. See

Becker v. Cent. States Health & Life Co. of Omaha, 431 N.W.2d 354, 357

(Iowa 1988), overruled in part on other grounds by Johnston Equip. Corp. of

Iowa v. Indus. Indem., 489 N.W.2d 13, 17 (Iowa 1992); Evjen v. Brooks,

372 N.W.2d 494, 496 (Iowa 1985). According to Lemartec, “[a] question

cannot be held to have been arisen and adjudged before an issue on the

subject could possibly have arisen.” Third Nat’l Bank of Louisville v. Stone,

174 U.S. 432, 434, 19 S. Ct. 759, 760 (1899).

      B. Position of ACT.

      1. Scope of issue litigated in federal litigation.    ACT claims that

determining the scope of the issue litigated in the prior action is critical to

application of issue preclusion.       In making that assessment, ACT

emphasizes that the fact that the opposing party raises new arguments

and presents different evidence is not determinative. See Soults Farms,

797 N.W.2d at 104–05.

      An important part of the issue preclusion analysis is identification

of the elements of the claims in the prior action. In the federal litigation,

ACT asserts that in order to prove its claim, ACT was required to show the

terms and conditions of the contract and that it performed all the terms

and conditions required under the contract. Royal Indem. Co. v. Factory

Mut. Ins., 786 N.W.2d 839, 846 (Iowa 2010). The federal court, according

to ACT, necessarily found that it had performed all the terms and
                                      19

conditions of the contract and that Lemartec had no “legal excuse” to

withhold payment.

       ACT asserts that in the federal action, the question of whether ACT

had a duty to indemnify Lemartec was litigated and decided. In resisting

summary judgment in the federal litigation, Lemartec identified provisions

of its contract with ACT that gave rise to an indemnification claim. ACT

points out that Lemartec amended its counterclaims in the federal

litigation to include breach of contract, breach of implied warranty of

fitness for a particular purpose, and breach of express warranty. In the

implied warranty claim, ACT notes that Lemartec identified the litigated

issues as whether ACT breached the independent duty “to provide the

conveying system components in accordance with the construction

drawings and specifications.” With respect to the indemnity claim, ACT

observes that Lemartec characterized the issue as whether “ACT breached

the implied warranty of merchantability and implied warranty of fitness

for a particular purpose.” ACT argues that “Lemartec cannot prevail on

its indemnity action because of the crucial issue of whether ACT breached

the duties it owed under the Purchase Order has already been decided

against Lemartec,” and contends therefore that the issue of indemnity has

been litigated and determined and is binding on Lemartec in the state

litigation.

       2. Precompletion vs. postcompletion defects.           ACT challenges

Lemartec’s    characterization   of   the   federal   litigation   as   involving

precompletion defects and the state court as involving postcompletion

defects. It notes, for instance, that some precompletion claims were raised

in the state litigation.

       ACT further notes that the alleged defects in both cases are based

on the same work performed by ACT pursuant to the same purchase order.
                                      20

According to ACT, the fact that HFCA filed its discovery responses in the

state litigation identifying specific defects in June 2018 does not change

the fact that ACT had performed all its obligations under the purchase

order when the federal litigation was pending.

      3. Maturity of indemnity claim. On the issue of when an indemnity

claim “fully matures,” ACT asserts that while the right to enforce a claim

of indemnity does not “accrue” until judgment against the indemnitee, the

claim “comes into being . . . the instant” the acts to support it occur. Evjen,

372 N.W.2d at 496–97 (quoting 18 Am. Jur. 2d Contributions § 46 (1965)).

In any event, as long as the issue of indemnity was raised in the first

litigation, ACT argues that issue preclusion applies if the issues “in the

second case involve[] issue[s] decided in the first case.”

      4. Waiver.    ACT argues that throughout Lemartec’s brief to this

court, Lemartec only asserts that its indemnity claims in the two actions

involve different issues. But ACT asserts that Lemartec did not argue that

its other state court claims––for breach of contract and breach of various

warranties––were not the same as the claims in federal litigation. As a

result, ACT argues that Lemartec has waived all claims in the state court

litigation except the indemnity claim.

      ACT then asks what the waiver of underlying substantive issues has

to do with its unwaived indemnity claim.        According to ACT, the state

district court will be bound by the federal court determination that the

other substantive claims are without merit. As a result, ACT suggests that

there is no remaining substantive basis for Lemartec’s indemnity claim.

      C. Discussion. A party asserting issue preclusion must establish

four elements:

      (1) the issue in the present case must be identical, (2) the issue
      must have been raised and litigated in the prior action, (3) the
      issue must have been material and relevant to the disposition
                                    21
      of the prior case, and (4) the determination of the issue in the
      prior action must have been essential to the resulting
      judgment.

Soults Farms, Inc., 797 N.W.2d at 104 (quoting Fischer, 654 N.W.2d at 547

(Iowa 2002).

      We think the issue-preclusion question centers on a determination

of the proper level of generality to be applied in determining the scope of

an “issue” for preclusion purposes. ACT argues that the scope of the issue

in the federal litigation should be broadly and categorically construed to

include all contract-type issues arising out of the purchase order between

ACT and Lemartec in this case. Because of ACT’s categorical approach,

its focuses on the similarity of the pleadings in the state and federal

litigation. And, there is no doubt that Lemartec’s pleadings in both cases

are similar.

      But there are certainly factual differences.      As pointed out by

Lemartec, the claims for which it seeks indemnity arise as a result of

different factual scenarios. SPG’s claims arose based on preinstallation

problems, while HFCA’s claims arose postinstallation and were based

upon the alleged corrosion of the installed conveyor belt system. The main

difference between ACT and Lemartec is whether the issue in this case is

a categorical one relating to all claims under the purchase order or a more

granular one based on the facts that give rise the dispute.

      We agree with Lemartec. In the federal court litigation, Judge Wolle
noted,

      Pared down to essentials, the remaining issues for trial were
      whether [Lemartec and/or ACT] owes money to the other for
      money earned but unpaid; project delays; and for additional
      work that was required to make the conveyor system
      functional.
                                     22

In the state court litigation, HFCA seeks recovery for claims that arose

from postinstallation defects.

      While it is true that the pleadings of Lemartec in both proceedings

were quite similar, Lemartec correctly points out that Iowa is a notice

pleading state and, as a result, the pleadings themselves may be so general

that they do not define the scope of the issues being litigated in the action.

Based on our examination of the record, the issue of corrosion in the

installed conveyor belt system was not “actually litigated” in the federal

litigation as generally required for application of issue preclusion. Haverly,

727 N.W.2d at 572. The issues that were actually litigated in the federal

proceeding arose from SPG’s claim that it lost money because of additional

expenses that arose prior to the installation of the conveyor belt.

      We do not think there is a generally applicable rule that there can

be only one litigated dispute under a contract. A contract may impose a

number of obligations on a contracting party, and breaches of the contract

may occur at different times and under different circumstances.           For

example, in Storey Construction, Inc. v. Hanks, 224 P.3d 468, 471 (Idaho

2009), an owner sued a contractor upon completion of a home and lost in

arbitration. Subsequently, the owner discovered water entering the house

arising from other defects. Id. The Hanks court noted, “There can be more

than one construction defect in a construction project. Under the parties’

contract, there can also be more than one claim ‘arising out of or related

to’ the parties’ construction contract.” Id. at 475.
      We conclude similar reasoning is applicable here.        The fact that
there has been prior litigation based on breach of contract does not mean
that there can be no subsequent action where the underlying claims arose
                                           23

at a different time based on different breaches. As a result, the district
court erred in granting summary judgment based on issue preclusion. 2
       V. Conclusion.
       For the above reasons, we conclude that the order of the district
court granting ACT summary judgment should be reversed and the case
remanded to the district court for further proceedings.
       REVERSED AND REMANDED WITH DIRECTIONS.
       All justices concur except Oxley, J., who takes no part.




       2ACT   suggests that Lemartec waived dismissal of some of claims III–VI by arguing
on appeal only that the indemnity claims involve separate issues. All of Lemartec’s
claims, however, fall under the umbrella of indemnity claims, regardless of the underlying
legal theory. The district court referred to indemnity counts in this case. We conclude
that there is no waiver problem here.
