Altercare Acupuncture, P.C. v Utica Mut. Ins. Co. (2011 NY Slip Op 51639(U))

Civil Court of the City of New York, Kings County

089993/09

Michael Weaver, Esq.

Bruno, Gerbino & Soriano, LLP

Attorneys for Defendant

445 Broad Hollow Road, Suite 220

Melville, NY 11747

631-390-0010

Law Offices of Melissa Betancourt, P.C.

Attorney for Plaintiff

155 Kings Highway, 3rd Floor

Brooklyn, New York 11223

718-336-8076

Lisa S. Ottley, J.

This action was commenced by the Plaintiff seeking payment of no-fault party benefits for services rendered on behalf of Sara Mounier pursuant to CPLR 5106(a) of the Insurance Law and Regulation of the New York State Insurance Department (11 NYCRR Sect. 65-1.1 et. seq.).

Defendant moves for an order pursuant to CPLR §3025(b), for leave to amend its Verified Answer, and upon this court granting defendant leave to amend its answer, for dismissal of the complaint pursuant to CPLR §3211(a) 5, under the doctrines of res judicata and collateral estoppel.

Discussion

Leave to amend a pleading pursuant to CPLR 3025(b) should be granted where there is no significant prejudice or surprise to the opposing party and where the proof submitted in support of the motion indicates that the amendment may have merit. See, Edenwald Contr. Co. v. City of New York, 60 NY2d 957 [1983].

Based upon the documents submitted in support of its motion for leave to amend its Verified Answer, the court hereby grants defendant’s motion to amend its Verified Answer. See, Uptodate Medical Service, P.C., v. State Farm Mutual Automobile Insurance Company , 22 Misc 3d 128(A), 880 N.Y.S.2d 227 (AT 2nd, 11th & 13th Judicial Dists., 2009).

Next, this court will address the issue as to whether defendant is entitled to dismissal of the action on the grounds of res judicata and collateral estoppel.

In the case at bar, the defendant-insurer brought an action in Supreme Court, Nassau County, seeking declaratory relief by the filing of a Summons and Complaint which the court deemed to have been duly served upon all the defendants named within the action, which failed to appear and/or interpose or serve an answer in the action. [See, Exh. “A” annexed to defendant’s moving papers herein]. By notice of motion, the defendant herein, and the plaintiff in the Supreme Court action moved pursuant to CPLR § 3215 for an order and judgment granting plaintiff the relief sought upon default, which was granted by the Hon. Anthony L. Parga, on October 1, 2010.

The defendant moves for dismissal of this action for payment of no-fault benefits [*2]on the grounds of res judicata and collateral estoppel, inasmuch as the declaratory judgment held that no coverage existed due to the fact the loss resulted from a staged accident.

Plaintiff argues, that a declaratory judgment granted on default does not have preclusive effect, and therefore, collateral estoppel does not preclude a party from litigating the action.

Although there is case law in support of plaintiff’s argument, the cases in support of plaintiff’s argument are distinguishable from this case. As argued by defendant, in Magic Recovery Med & Surgical Supply, Inc. v. State Farm Mutual Auto Insurance Company, 27 Misc 3d 67, 901 N.Y.S.2d 774 (AT 2nd, 11 & 13th Jud. Dists., 2010), the insurance company failed to name the party in the declaratory action, therefore, the res judicata and collateral estoppel could not be granted. In EMA Acupuncture, P.C. v. Lumbermens Mutual Casualty Company, 27 Misc 3d 141, 911 N.Y.S.2d 692 (AT 2nd, 11 & 13th Jud. Dists., 2010), which was not the basis of a default declaratory judgment, but was based on whether an Order issued on default pursuant to CPLR §3216 which fails to specify whether the dismissal is with prejudice or on the merits, has a preclusive effect.

Recently, this Court in a decision by the Hon. Devin P. Cohen, denied defendant’s motion to dismiss on the ground of collateral estoppel. As in this case, the motion raised the question of the effect of a declaratory judgment order, issued on default with respect to collateral actions seeking to litigate the same issue. Judge Cohen provides a detailed analysis of the applicable law and policies underlying declaratory judgments, collateral estoppel and default judgments. See, Beford Medical Care, P.C., a/a/o Vincent Meyers v. Encompass Insurance Company, 31 Misc 3d 222, 915 N.Y.S.2d 452 [Civ. Ct., Kings Co., 2011].

Interestingly, however, the decision does not address the doctrine of res judicata. Perhaps, the defendant in that case, did not move for dismissal on the ground of res judicata.

The doctrines of res judicata and collateral estoppel are designed to put an end to a matter once it is duly decided. See, Siegel, NY Practice §442 at 747 [4th Ed.]. Res judicata, or claim preclusion, is invoked when a party, or one in privity with the party, seeks to relitigate a disposition on the merits of claims, or causes of action, arising out of the same, or series of, transactions which were raised, or could have been raised, in the [*3]

prior action. See, Matter of Hunter, 4 NY3d 260 [2005]. Res judicata applies “when a different judgment in the second [action] would destroy or impair rights or interests established by the first. See, Matter of Hunter, 4 NY3d 260 [2005]; Schuykill Fuel Corp. v. Nieberg Realty Corp., 250 NY 304.

In SZ Medical, P.C., Life Chiropractic, P.C., JH Chiropractic, P.C., New Wave Oriental Acupuncture, P.C., a/a/o Clinton Charles v. Erie Insurance Company, 24 Misc 3d 126(A), 889 N.Y.S.2d 884 [AT 2nd, 11th & 13th Judicial Dists., 2009], the court affirmed the dismissal of the case on the lower level, and held the following:

The determination as to whether there was coverage is crucial to both

plaintiffs and defendant herein, and arises out of the same transaction,

i.e., the subject accident (see e.g. Abraham v. Hermitage Ins. Co., 47

AD3d 855 [2008]; Sabatino v. Capco Trading, Inc., 27 AD3d 1019,

1020 [2006]), and a different judgment in the instant action would

destroy or impair rights or interests established by the Supreme

Court judgment (see, e.g. Schuykill Fuel Corp. v. Nieberg Realty

Corp., 250 NY at 306-307). Moreover, the record established that

defendant and the wholly owned subsidiary had the requisite privity

(see, e.g. Spasiano v. Provident Mut. Life Ins. Co., 2 AD3d 1466

[2003]). Consequently, plaintiffs were barred from relitigating the

claim pursuant to the doctrine of res judicata.

Thereafter, the First Department in Pomona Medical Diagnostics, P.C., a/a/o Jarrod Ward v. Metropolitan Casualty Ins. Co., 29 Misc 3d 138(A), 920 N.Y.S.2d 243 (1st Dept., 2010), citing SZ Medical, P.C., Life Chiropractic, P.C., JH Chiropractic, P.C., New Wave Oriental Acupuncture, P.C., a/a/o Clinton Charles v. Erie Insurance Company, 24 Misc 3d 126(A), 889 N.Y.S.2d 884 [AT 2nd, 11th & 13th Judicial Dists.], reversed the lower court’s denial of defendant’s motion for summary judgment, and held: “Contrary to plaintiff’s claim, the Supreme Court judgment is a conclusive final determination, notwithstanding that it was entered on default of plaintiff, since res judicata applies to a judgment taken by default that has not been vacated (see, Trisingh Enters., Inc., v. Kessler 249 AD2d 45 [1998]; Robbins v. Growney, 229 AD2d 356 [1996].

Herein, the plaintiff-provider, as determined by the Supreme Court, was duly served with the Summons and Complaint in the declaratory action, and therefore, judgment was entered in favor of the defendant-insurer, on October 1, 2010, due to the [*4]provider’s failure to serve and file an answer to the Summons and Complaint. There is nothing in the record to indicate that the plaintiffs, Altercare, et .al., have moved to vacate the default judgment in the Supreme Court.

Accordingly, defendant’s motion to dismiss on the ground of res judicata is hereby granted.

This constitutes the order of this Court.

Court Attorney to notify.

Dated: Brooklyn, New York

August 30, 2011

______________________________

LISA S. OTTLEY, A.J.S.C.