February 5, 2021

Triborough Psychiatric v State Farm Mut. Ins. Co. (2021 NY Slip Op 50084(U))

https://www.beynensonlaw.com/case-law/triborough-psychiatric-v-state-farm-mut-ins-co-2021-ny-slip-op50084u/

Court: Appellate Term, Second Department
Decided: February 5, 2021
Citation: 2021 NY Slip Op 50084(U)
Posture: Motion to dismiss (CPLR 3211)
Outcome: Provider prevailed
Issues: Declaratory judgment, res judicata
Legal questions: Effect of insurer's declaratory judgment (see the maps)

Cite as

Triborough Psychiatric v State Farm Mut. Ins. Co., 2021 NY Slip Op 50084(U) (App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021)

Posture, outcome, issues and treatment by other decisions are Beynenson Law’s classification. Treatment labels are assigned by a language model reading the citing decision; negative and appeal-history labels are checked by a second reader.

Summary

Editorial summary by Beynenson Law, not part of the court’s decision.

The provider's claim was not barred by collateral estoppel because the declaratory judgment was entered on default and privity was absent. The insurer obtained a judgment against the assignor declaring the collision staged, the policy void for related claims, and no duty to pay no-fault benefits. Under Kaufman v Eli Lilly & Co., the issues had not been actually litigated on the merits. The provider and assignor also were not in privity when the declaratory judgment action began, because the provider had already commenced its action as assignee. The Appellate Term, Second Department, reversed the dismissal, denied the collateral estoppel branch of the insurer's motion, and remitted the matter for determination of the remaining grounds.

Reported in New York Official Reports at Triborough Psychiatric v State Farm Mut. Ins. Co. (2021 NY Slip Op 50084(U))

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Triborough Psychiatric, as Assignee of Maria Dominquez, Appellant,
against
State Farm Mutual Insurance Co., Respondent.

Law Office of David O’Connor, P.C. (David O’Connor of counsel), for appellant. Rivkin Radler, LLP (Stuart M. Bodoff and Cheryl F. Korman of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Queens County (Philip Hom, J.), entered February 20, 2019. The order granted the branch of defendant’s motion seeking dismissal of the complaint on the ground that plaintiff’s action is barred by the doctrine of collateral estoppel.

ORDERED that the order is reversed, with $30 costs, the branch of defendant’s motion seeking dismissal of the complaint on the ground that plaintiff’s action is barred by the doctrine of collateral estoppel is denied and the matter is remitted to the Civil Court for a determination of the remaining branches of defendant’s motion.

Plaintiff commenced this action in 2003 to recover first-party no-fault benefits as assignee of the eligible injured person for services provided to its assignor, who was allegedly injured in a motor vehicle accident on August 26, 2002. Thereafter, State Farm commenced a declaratory judgment action in Supreme Court, Nassau County, against the assignor and a number of other individuals. Upon the default of the assignor, among others, in submitting opposition to State Farm’s motion for declaratory relief, the Supreme Court, in a judgment entered on November 22, 2006, declared that the August 26, 2002 collision had been a staged accident; that the insurance policy at issue is null and void with regard to any claim arising out of that collision; and that State Farm has no duty to provide no-fault benefits to the assignor herein and the other individual defendants. Defendant then moved in the Civil Court for an order dismissing the complaint on several grounds, including a lack of coverage due to a staged accident, as previously determined by the Supreme Court. In opposition, plaintiff argued that it did not have a “full and fair” opportunity to litigate the declaratory judgment action. By order entered February 20, 2019, the Civil Court granted defendant’s motion, finding that plaintiff’s claim is barred under the doctrine of collateral estoppel.

“Collateral estoppel precludes a party from relitigating an issue where “the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action” (Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 349 [1999]; see D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659 [1990]; Manko v Gabay, 175 AD3d 484 [2019]). As the declaratory judgment was obtained on default and not actually litigated on the merits in the Supreme Court, there is no identity of issues between the present action and the prior determination in the declaratory judgment action (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457 [1985]; Matter of Hereford Ins. Co. v McKoy, 160 AD3d 734, 736 [2018]; 47 Thames Realty, LLC v Rusconie, 85 AD3d 853, 853 [2011]). Moreover, as plaintiff commenced this action in 2003 as assignee of the eligible injured person, plaintiff and its assignor were not in privity when the declaratory judgment action was commenced in 2005. Consequently, contrary to the determination of the Civil Court, plaintiff’s action is not barred under the doctrine of collateral estoppel.

As the Civil Court did not address the alternate grounds asserted by defendant in its motion seeking dismissal of the complaint, the matter must be remitted to the Civil Court for a determination of those remaining grounds (see Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 67 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]; see also McElroy v Sivasubramaniam, 305 AD2d 944 [2003]).

Accordingly, the order is reversed, the branch of defendant’s motion seeking dismissal of the complaint on the ground that plaintiff’s action is barred by the doctrine of collateral estoppel is denied and the matter is remitted to the Civil Court for a determination of the remaining branches of defendant’s motion.

ALIOTTA, P.J., ELLIOT and TOUSSAINT, JJ., concur.

ENTER:
Paul Kenny
Chief Clerk
Decision Date: February 5, 2021

Legal questions

A question of no-fault law this decision rules on, from our Legal Questions pages. Bars count the decisions on the question by year and court, coloured by category; circles are this decision and the decisions on the question it cites or that cite it. Point at a bar or circle for details. The categories and summaries are Beynenson Law’s classification, made by a language model and checked by a second reading.

Effect of insurer's declaratory judgment

Open the full map

Does an insurer’s no-coverage declaratory judgment, or pending declaratory action, bar or stay a no-fault claimant’s action?

This decision: No preclusion because the claimant (or insurer) was not a party or privy to the DJ

Held the default declaratory judgment against the assignor had no collateral estoppel effect because nothing was actually litigated, and the provider, whose assignment and suit predated the declaratory action, was not in privity with the assignor.

Barred by DJBarred in partNot bound: partiesDJ does not reachStayed pending DJStay deniedThis decisionCites it or cited by itCited or followed

Of the 163 decisions on this question in the Second Department courts and the Court of Appeals, 20 (this one included) are in the same category.

Cited in this decision

A label shows how this decision treated the case it cites.

Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co. (2010 NY Slip Op 20130) FollowedThe provider was not collaterally estopped by default declaratory judgments in actions where it was neither a party nor in privity.

Similar decisions

Horizon P.T. Care, P.C. v State Farm Mut. Auto. Ins. Co. (2023 NY Slip Op 50295(U))The provider's claims were barred by res judicata because a prior default declaratory judgment adjudicated the same bills.
Triboro Quality Med. Supply, Inc. v State Farm Mut. Auto. Ins. Co. (2012 NY Slip Op 51289(U))The provider's claim was barred by collateral estoppel because a prior jury verdict resolved whether the injuries arose from an insured incident.
Island Life Chiropractic Pain Care, PLLC v Allstate Ins. Co. (2018 NY Slip Op 51006(U))The insurer failed to establish collateral estoppel or valid policy cancellation in support of its lack-of-coverage defense.
St. Mark’s Med. Health Care, PLLC v 21st Century Ins. Co. (2020 NY Slip Op 50851(U))An unvacated default declaratory judgment can bar a provider's later no-fault action under res judicata.
A.B. Med. Servs. PLLC v State Farm Mutual Auto Ins. Co. (2006 NY Slip Op 50598(U))Nonparty provider-assignees are not bound by a judgment against assignors when their assignments preceded the action.