A.B. Med. Servs. PLLC v State Farm Mutual Auto Ins. Co. (2006 NY Slip Op 50598(U))

Civil Court, Kings County

33911/02

Karen Rothenberg, J.

Defendant State Farm Mutual Auto Ins. Co. (hereinafter “State Farm”) moves pursuant to CPLR 3211(a)(5) to dismiss the plaintiffs’ actions on the grounds that plaintiffs are collaterally estopped from maintaining the actions in light of a declaratory judgment entered in Supreme Court. After review of the papers submitted herein, this court hold that collateral estoppel is not applicable and the plaintiffs are not bound by the declaratory judgment.

In 2002, plaintiffs, as assignees of Marie Paul and Estella Amilcar, commenced these actions to recover first-party no-fault benefits for medical services provided to the assignors for an accident that occurred on February 21, 2001. On March 12, 2003, State Farm commenced a declaratory judgment action in Supreme Court, Kings County for a determination that it was not obligated to provide coverage for the accident. These assignors, but not the assignees, were among the persons served in the declaratory judgment action. State Farm moved for a default judgment against the parties based upon their failure to appear, and said motion was granted by order of the Hon. Laura Jacobson entered in the Clerk’s Office of the Supreme Court on April 12, 2004. The default order provided that “State Farm Mutual Auto Ins. Co. has no obligation to provide UM, SUM or PIP benefits to the …. passengers, Estella Amilcar [and] Marie Paul…”, and [*2]stated that the “loss of 2-21-01 was intentional and therefore an uncovered event.”

Defendant argues that the declaratory judgment should be entitled to collateral estoppel effect, thereby precluding plaintiffs from maintaining these actions for no-fault benefits. Collateral estoppel, or issue preclusion, may be applied in a subsequent action to prevent a party or those in privity, from relitigating an issue decided in a prior adjudication. (see Ryan v New York Tel. Co., 62 NY2d 494, 478 N.Y.S.2d 823). In order to invoke collateral estoppel it must be shown that (1) there was a full and fair opportunity to contest the decision that is alleged to be dispositive in the present action and (2) the issue in the present proceeding is identical to that decided in the prior proceeding. (see Langdon v. WEN Management Co., 147 AD2d 450, 537 N.Y.S.2d 603).

For collateral estoppel to be applied, it must be established that plaintiffs, who were not parties to the previous action, are privy to the prior judgment. (see Green v. Santa Fe Industries, Inc., 70 NY2d 244, 519 N.Y.S.2d 793). The determining factor is the point in time when the relationship between the party to the prior litigation and the person(s) claimed to be a privy is formed. In the assignor-assignee context, “privity must have arisen after the event out of which the estoppel arises.” Gramatan Home Investors Corp., v. Lopez, 46 NY2d 481 at 486, 414 N.Y.S.2d 308 at 312. As the Court of Appeals in Gramatan, cited supra, explained:

“an assignee is deemed to be in privity with the assignor where the action

against the assignor is commenced before there has been as assignment. In

that situation, at the time the assignee succeeded to the rights of the assignor, the subject matter of the assignment was then embroiled in litigation and was

subject to the claims of the third parties and the assignee is charged with notice

that his rights to the assignment are subject to competing claims. Conversely

an assignee is not privy to a judgment where the succession to the rights affected

thereby has taken place prior to the institution of the suit against the assignor.”

(Gramatan Home Investors Corp., v. Lopez, supra, at 486; 312.)

In the instant situation, since assignments were made prior to the commencement of the declaratory judgment action against the plaintiffs’ assignors, plaintiffs are not bound by the terms of the judgment. Moreover, in light of the fact that the declaratory judgment was obtained by default, there was no actual litigation on the merits, and therefore there is no identity of issues between this action and the prior determination in the declaratory judgment action. (see Zimmerman v. Tower Ins. Co., 13 AD3d 137, 788 N.Y.S.2d 309; Chambers v. The City of New York, 309 AD2d 81, 76 N.Y.S.2d 708).

In light of the foregoing, the defendant’s motion is denied in its entirety.

This constitutes the decision/order of the court.

March 3, 2006 ———————————————————-

DateJudge, Civil Court