Insurance — Contractors — Coverage — Construction defects — Declaratory judgment — Issue preclusion — Insurer that issued contractors policy of insurance to subcontractor appealed both the final judgment entered in favor of plaintiff homeowner and the district court’s order denying insurer’s motion in limine, which sought to bar homeowner as assignee of contractor from presenting evidence of when damages to home manifested based on doctrine of issue preclusion — When determining the preclusive effect of an earlier judgment rendered by a federal court exercising diversity jurisdiction, federal common law adopts the rules of issue preclusion applied by the State in which the rendering court sits — District court was required to apply Alabama’s rules of issue preclusion to determine the preclusive effect of a judgment entered by a federal court exercising diversity jurisdiction on a nonparty to the earlier federal action — District court applied incorrect legal standard in determining whether homeowner and homeowner as assignee of contractor were in privity in prior declaratory judgment action where court applied federal rules of nonparty issue preclusion in determining preclusive effect of prior declaratory judgment in which the federal court exercised diversity jurisdiction — Because the district court failed to apply Alabama’s rule of issue preclusion, specifically the application of privity to justify nonparty issue preclusion, and instead applied a federal rule of issue preclusion that is not substantively similar to Alabama’s rule on nonparty issue preclusion, the court abused its discretion when it denied insurer’s motion in limine — Final judgment in favor of plaintiff must be vacated and case remanded for district court to apply Alabama’s rules of issue preclusion to determine issue of privity in first instance
28 Fla. L. Weekly Fed. C1604a
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