Robert Thompson and his passenger, David Harness, were involved in an automobile accident with Duane Fagnan (plaintiff). Thompson was killed in the accident, and Harness and Fagnan sustained injuries. In a prior action, Harness sued the administrator of Thompson’s estate. Thompson’s administrator filed a third-party claim against Fagnan. Fagnan subsequently cross-claimed against Thompson’s administrator for contribution. That case was settled without a trial and was dismissed. The dismissal operated as a judgment on the merits. Thereafter, Fagnan brought this action against Thompson’s insurer, Great Central Insurance Co. (Great Central) (defendant), in a Wisconsin state court under Wisconsin’s direct action statute. Great Central removed the case to the United States District Court for the Western District of Wisconsin. At trial, the district court entered judgment in favor of Fagnan. Great Central appealed, arguing that any claim Fagnan had against Thompson’s estate was disposed of by the judgment in the prior action.